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Definition of 'Passive Activity'
Activity in which the taxpayer did not materially participate in during the tax year. Internal Revenue Service (IRS) defines two types of passive activity: trade or business activities not materially participated in, and rental activities even if the taxpayer materially participated in them (unless the taxpayer is a real estate professional). Material participation is defined by the IRS as involvement in the activity of the business on a regular, continuous and substantial basis.
The passive activity rules apply to individuals, estates, trusts (except grantor trusts), closely held corporations, and personal service corporations.
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Investopedia explains 'Passive Activity'
Income from rental properties is a suitable example of a passive activity. Making a distinction between passive and active income is important because the taxpayer can claim a passive loss only against income generated from passive activities. A passive loss cannot be claimed against active income. Any excess passive activity loss can be carried forward to future years until used, or until it can be deducted in the year when the taxpayer disposes of the passive activity in a taxable transaction.
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Search results for 'Passive Activity'
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http://www.investopedia.com/articles/07/oil-tax-break.asp
... Income: The tax code specifies that a working interest (as opposed to a royalty
interest) in an oil and gas well is not considered to be a passive activity. ...
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http://www.investopedia.com/exam-guide/cfp/financial-planning-process-rules/default.asp
... 41. Passive Activity And At-Risk Rules: 41.1 Introduction; 41.2 Computations
and Treatment of Disallowed Losses; 41.3 Disposition of ...
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http://www.investopedia.com/exam-guide/cfp/principles-of-risk-and-insurance/default.asp
... 41. Passive Activity And At-Risk Rules: 41.1 Introduction; 41.2 Computations
and Treatment of Disallowed Losses; 41.3 Disposition of ...
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http://www.investopedia.com/exam-guide/cfp/principles-of-risk-and-insurance/cfp2.asp
... 41. Passive Activity And At-Risk Rules: 41.1 Introduction; 41.2 Computations
and Treatment of Disallowed Losses; 41.3 Disposition of ...
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http://www.investopedia.com/exam-guide/cfp/property-casualty-liability-insurance/default.asp
... 41. Passive Activity And At-Risk Rules: 41.1 Introduction; 41.2 Computations
and Treatment of Disallowed Losses; 41.3 Disposition of ...
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http://www.investopedia.com/exam-guide/cfp/property-casualty-liability-insurance/cfp4.asp
... 41. Passive Activity And At-Risk Rules: 41.1 Introduction; 41.2 Computations
and Treatment of Disallowed Losses; 41.3 Disposition of ...
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http://www.investopedia.com/articles/pf/06/disabilityinsurance.asp
... became disabled. Passive income activity, such as investments and sick pay
would not be considered gainful activity income. However ...
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http://www.investopedia.com/university/quality-mutual-fund/chp6-fund-mgmt/passive-active.asp
... investing style, growth, risk and return profile, trading activity, costs and ... succeed
in today's highly competitive investment markets
passive index funds ...
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http://www.investopedia.com/university/quality-mutual-fund/chp6-fund-mgmt
... investing style, growth, risk and return profile, trading activity, costs and ... succeed
in today's highly competitive investment markets
passive index funds ...
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http://www.investopedia.com/university/quality-mutual-fund/chp6-fund-mgmt/
... investing style, growth, risk and return profile, trading activity, costs and ... succeed
in today's highly competitive investment markets
passive index funds ...
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