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 ?
If the sale results in a gain, the gain is considered passive income and the losses are deducted against the gain, with any excess losses deductible against other income.
The passive loss can only be used to offset other passive income or be carried over.
For the Citira [Corporate Income Tax and Incentives Reform Act], that's neutral; similar with valuation reform and passive income. For the passive income, probably a small gain depending on how the final package comes out,' she added.
The remaining $9,000 ($23,000--$14,000) suspended loss carries forward, and she can deduct it against passive income in subsequent years.
Passive Income Generators (PIGs) can absorb Passive Activity Losses (PALs) one-for-one, and there are no Limitations on combining PIGs with existing Passive Losses.
She had no other passive income, and her AGI was above $150,000.
(54) "Passive income" is defined in subsection 1297(b) of the Code as income that would be "foreign personal holding company income" in subsection 954(c), subject to certain exceptions (such as for income from certain active banking or insurance businesses, and certain income received or accrued from a related person allocable to non-passive income of such related person).
Taxpayers with significant passive income will immediately enjoy the benefits of these new tax write-offs.
Taxpayers who were confidently creating passive activity income by renting property to their closely held C corporations suddenly found their passive income generator (PIG) had become a pig in a poke when the Treasury reversed its position in October 1994 and declared the income to be nonpassive.
* Passive losses are deductible only to the extent of net passive income. Losses in excess of income are called "suspended losses" and are carried forward to be used to offset passive income in future years.
These losses are deductible only to the extent of passive income. Furthermore, losses from partnerships that are publicly traded are deductible only to the extent of passive income from that particular publicly traded partnership.

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