The EITC investment-income formula derives its result from net_investment_income, allowing negative passive S-corp income to offset taxable interest and dividends. A 2021 return with $7,147.17 interest and $12,442.61 dividends incorrectly receives $660.40 EITC after mapping passive income; those portfolio amounts alone exceed the $10,000 limit.
2021 Publication 596 Worksheet 1 (p. 7), lines 13–15, floors the passive-activity basket before adding other investment income: https://www.irs.gov/pub/irs-prior/p596--2021.pdf#page=7
Compute the EITC investment-income baskets independently of NIIT and cover losses, positive passive income, capital losses and the eligibility boundary.
Verified against current main e3457b9 as well as the audited PE-US 2.6.17. Source-backed audit: https://github.com/PolicyEngine/policyengine-taxsim/blob/9549daf5/docs/scorp-source-review.md
The EITC investment-income formula derives its result from net_investment_income, allowing negative passive S-corp income to offset taxable interest and dividends. A 2021 return with $7,147.17 interest and $12,442.61 dividends incorrectly receives $660.40 EITC after mapping passive income; those portfolio amounts alone exceed the $10,000 limit.
2021 Publication 596 Worksheet 1 (p. 7), lines 13–15, floors the passive-activity basket before adding other investment income: https://www.irs.gov/pub/irs-prior/p596--2021.pdf#page=7
Compute the EITC investment-income baskets independently of NIIT and cover losses, positive passive income, capital losses and the eligibility boundary.
Verified against current main e3457b9 as well as the audited PE-US 2.6.17. Source-backed audit: https://github.com/PolicyEngine/policyengine-taxsim/blob/9549daf5/docs/scorp-source-review.md