passive income

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Related to passive income: Active income, Portfolio Income

Passive income

Income (such as investment income) that does not come from active participation in a business. Specified by the U.S. tax code.

Passive Income

Income from a venture in which an individual does not directly participate. The most common types of passive income are rents and income from a limited partnership. Some analysts consider income derived from securities such as dividends and coupons to be passive income, while others put it into a separate category as portfolio income. Passive income is taxable, but it is often treated differently than active income.

passive income (loss)

A special category of income (loss) derived from passive activities, including real estate, limited partnerships, and other forms of tax-advantaged investments. Investors are limited in their deduction of passive losses against active sources of income, such as wages, salaries, and pension income.

Passive income.

You collect passive income from certain businesses in which you aren't an active participant.

They may include limited partnerships where you're a limited partner, rental real estate that you own but don't manage, and other operations in which you're an investor but have a hands-off relationship.

For example, if you invest as a limited partner, you realize passive income or passive losses because you don't participate in operating the partnership and have no voice in the decisions the general partner makes.

In some cases, income from renting real estate is also considered passive income. On the other hand, any money you earn or realize on your investment portfolio of stocks, bonds, and mutual funds is considered active income. That includes dividends, interest, annuity payments, capital gains, and royalties.

Any losses you realize from selling investments in your portfolio are similarly active losses.

Internal Revenue Service (IRS) regulations differentiate between passive and active income (and losses) and allow you to offset passive income only with passive losses and active income with active losses.

passive income

See passive activity income.

Passive Income

Passive income is income from business activities in which the taxpayer does not materially participate, and most rental activities. See also Material Participation and Portfolio Income.
References in periodicals archive ?
However, when taxpayers do not have any other passive income, an activity with a loss needs to be nonpassive to receive a current deduction.
This loss carryover can be used against any other passive income X has or may be carried forward to future years.
Once a passive loss has been disallowed under the phase-in provisions, it may only be deducted to the extent the taxpayer has passive income from other passive activities.
One hundred percent of the investment in the film fund is tax deductible against passive income by the investor.
16, 2012 /PRNewswire-iReach/ -- Some of the best passive income ideas 2013 has to offer are those that require little start up cost and that can start generating that passive income within a reasonable amount of time.
An additional income stream is a unique storage business that pulls in recurring passive income.
In other words, if rental of the property to the LLC generates passive income for the member, the income will be recharacterized as nonpassive (to be offset by the member's share of the nonpassive LLC rental expense deduction).
IRC section 469 generally disallows a deduction in the current year for the amount by which taxpayers' losses from passive activities exceed their passive income; instead, such losses can be carried forward and offset against passive income in future years.
Since LIHTCs are usually generated by passive activities through the work of nonreal estate professionals, the LIHTQ; can be used to offset taxes only on passive income.
The PFIC rules thus not only tax passive income, but also impose a financial toll charge on the operating income of controlled foreign corporations (CFCs), which are already subject to tax on their passive income under Subpart F of the Code.
Companies that have significant amounts of passive income can benefit from transferring investments generating such income to a separate investment subsidiary located in a state, such as Delaware, that gives favorable tax treatment to such entities.

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