To illustrate, if a taxpayer owns an interest in an S corporation that earns a certain amount in income and distributes half the sum to the taxpayer, the taxpayer would include the amount in his calculation of the NII sum if he does not materially participate in the S corporation.
Reuters, July 27, 2011: In a 106-page decision, U.S. District Judge Lewis Kaplan in Manhattan said the plaintiffs, which include retirement and pension funds around the world, companies and individuals, sufficiently alleged that Lehman materially misled them about its accounting and its ability to manage risk ahead of its September 15, 2008, bankruptcy.