Passive income, such as interest, dividends, rents, and royalties, always constitutes nonbusiness income.

Question

Quizplus · Accepted Answer

Passive income can be classified as either business or nonbusiness income depending on the taxpayer's level of involvement and the nature of the activity generating the income. For example, rental income can be considered business income if the taxpayer actively participates in managing the property.

Passive Income, Such as Interest, Dividends, Rents, and Royalties, Always