Tax on investment gain

(a) Increase in tax (1) In general Subsection (a) of section 1411 of the Internal Revenue Code of 1986 is amended by striking 3.8 percent each place it appears and inserting 16.2 percent. (2) Conforming amendment The heading for chapter 2A of the Internal Revenue Code of 1986 is amended by striking Unearned income medicare contribution and inserting Additional tax on unearned income in lieu of Social Security and Medicare taxes. (b) Inclusion of active trade or business income (1) In general Section 1411(c)(1)(A) of the Internal Revenue Code of 1986 is amended— (A) in clause (i), by striking, other than such income which is derived in the ordinary course of a trade or business not described in paragraph (2), (B) in clause (ii), by striking described in paragraph (2) and inserting (determined under rules similar to the rules of paragraphs (5) and (6) of section 469(c)), and (C) in clause (iii), by striking other than property held in a trade or business not described in paragraph (2). (2) Denial of deduction for net operating losses Section 1411(c)(1)(B) of such Code is amended by inserting (other than the deduction for net operating losses provided in section 172) after net gain. (3) Conforming amendments (A) Section 1411(c) of such Code is amended by striking paragraphs (2), (3), and (4) and by redesignating paragraphs (5) and (6) as paragraphs (2) and (3), respectively. (B) Section 1411(c)(3) of such Code, as redesignated by subparagraph (A), is amended to read as follows: (3) Special rule Net investment income shall not include— (A) any item taken into account in determining self-employment income for such taxable year on which a tax is imposed by section 1401, or (B) any item taken into account in determining wages received with respect to employment for such taxable year on which a tax is imposed by section 3101.. (c) Effective date The amendments made by this section shall apply to taxable years beginning after the date of enactment of this Act.