Assume further that interest and dividends are earned in the activity and are either allocated to you on a Schedule K-1 (in the case of an S corporation or partnership) or reported by you on Schedule C (in the case of a sole proprietorship).

FORBES: Overview Of The New 3.8% Investment Income Tax, Part 1

One could make a convincing argument that in the industrial age, the company (whether multinational corporation, limited liability company, or sole proprietorship) has been the oikos.

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The company was founded in 1995 as a sole proprietorship by Paul Kinuthia, a relatively unknown Kenyan businessman.

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He runs his consulting business as a sole proprietorship paying self-employment tax on the whole profit.

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An LLC can also be suitable for the single owner who wants the liability coverage of a corporation but the more simplified tax treatment and operational freedom of a sole proprietorship.

WSJ: Forming an LLC

As you will see in the subsequent posts, materially participating in an activity, whether it be an S corporation, partnership or sole proprietorship, is a prerequisite to excluding any income from net investment income.

FORBES: Overview Of The New 3.8% Investment Income Tax, Part 1