Grettas parents, Hans and Helga, are doing fairly well financially. Hans has retired from his law practice and now spends his time in large part playing with his money. He retired three years ago from a large Chicago law firm where he put together multinational ventures for German automakers and manufacturing concerns.

Hans and Helga saved and set aside much of his earnings from his full-time work during their forty years of marriage, and now have a tidy nest egg to invest. For 2019, their income and loss results from various holdings include:

• Helga received $14,000 for consulting work for local nonprofit organizations, reported to her on IRS Forms 1099. She spends about 75 hours per year consulting with nonprofit agencies.
• $48,000 in interest income on various U.S. Treasuries and corporate bonds.
• $145,000 in dividends from various publicly held corporations.
• Net long term capital gains of $124,000 on sales of marketable securities.
• Hans received a Form K-1 from his law firm (as he still holds an equity interest in the partnership), with his allocable share of the net income totaling $163,000.
• Hans received a K-1 from a technology company, in which he invested but is not involved in the activity, with a loss of $85,000.
• Hans received a K-1 from a real estate management LLC, in which he invested but is not involved in the activity, with income of $55,000.
• Helga received a K-1, with net income of $19,000, for having invested in a private digital marketing company with 50 employees that her friend started (and the friend manages full time). Helga prepares for and attends the quarterly board of advisors meetings, reviews monthly financial reports, and spends about 150 hours a year contributing on company matters.

1. Summarize which items are in the passive activity bucket and passive for Hans and Helga.
2. Summarize which items are in the passive activity bucket and nonpassive for Hans and Helga.
3. In your last conversation with Hans he mentioned being in the 20% tax bracket with his capital gains and dividends. For particular accuracy and assuming they are in the highest tax bracket, is he correct or do you advise him of a different total tax rate on those items of income?
4. If the capital gains realized by Hans were short term capital gains, would they still be subject to the net investment income tax?