Effective for taxable years beginning on or after January 1, 2013, the Health Care and Education Reconciliation Act of 2010 imposes a 3.8% Medicare contribution tax on net investment income (“3.8% tax”) of certain higher income taxpayers. The SEC staff recently issued guidance on whether the 3.8% tax should be included in determining the highest individual marginal federal income tax rate used to calculate after-tax returns required to be disclosed in Form N-1A. The SEC’s view is that because investors that are subject to the highest marginal rate on taxable income are also subject to the 3.8% tax, registrants should include the 3.8% tax in after-tax return calculations. The SEC further indicated that the 3.8% tax should also be included in calculating the tax on qualified dividend income and long-term capital gains or any tax benefit resulting from capital losses that are required to be reflected in after-tax returns. The text of the SEC’s Guidance can be found here.