Active income

Active income

Income from an active business as opposed to passive investment income according to the U.S. tax code.

Active Income

The regular compensation that an individual receives in the form of salary, wages, tips, commissions, and/or any other source. For example, rents and dividends are not considered active income because an individual does not need to do anything in order to earn them. An individual earns active (and passive) income in order to pay for personal expenses, such as a mortgage, debt service, groceries, etc. Active income is necessary for an economy to function. See also: Passive income, Portfolio income.
References in periodicals archive ?
This means the passive income produced by your investments are equal to or greater than you active income.
For example, the ability to write off passive losses against taxable active income was phased-out during the following four years, without grandfathering, and depreciation went from 20 years up to 30 (a move that was like "throwing the baby out with the bathwater," says Sharp).
Away from renewables, a similar pattern has been emerging for small distributed generators - designed to keep the lights on during cold windless spells - with numerous projects unsure which otherwise expected and currently active income streams they will still be able to earn, and which will be removed from under their feet in the coming years, making it hard for investors to back these schemes.
For active income, it could generally not be earned without taxation by source countries, because corporate investments by multinationals were generally immobile and tax competition was limited in scope.
Deferral of active income of controlled foreign $418
The topics are jurisdiction to tax and definitions, the source rules, the inbound taxation of passive and active income, transfer pricing, the outbound taxation of passive and active income, the tax treaty network, capital mobility versus labor mobility, the single tax principle, the problem of non-discrimination, the future of transfer pricing, base erosion and profit sharing, and the future of the international tax regime.
Accordingly, a taxpayer otherwise subject to the NIIT should assess whether passive income may be transformed into active income by increasing participation to qualify for nonpassive status under the material participation standards.
Generally, FPHCI consists of passive income, such as interest, dividends, annuities, net gains from sale of property that does not generate active income, net commodities gains, net foreign currency gains, certain rents and royalties, and income from personal service contracts.
The League also is pushing for additional tax-code changes that nail down the nebulous question of when an investor is able to write off a passive loss against active income.
Considering their retirement age and average lifespan, people normally have about 30 to 35 working years, when they are able to support themselves, and another 20 to 25 years when they stay idle and don't have an active income.
This allows such a taxpayer's passive losses to offset active income.