For purposes of the Net Investment Income (NII) calculations:

A) Category 2 income can be reduced by a Category 1 loss.

B) Category 2 income can only be earned by a material participant in the business.

C) category 2 income may be a net loss or net income.

D) The active participant does not include in Category 3 income gain from the sale of trade or business equipment for the active participant in the business.