________ income is from activities in which the taxpayer does not actively participate.

Question

Quizplus · Accepted Answer

Passive income is income that the taxpayer earns without actively participating in the activity that generates the income. Examples include rental income, dividends, and royalties. Portfolio income, on the other hand, includes income from investments such as stocks and bonds, but the taxpayer may actively manage these investments. Therefore, the correct answer is C, passive income.

________ Income Is from Activities in Which the Taxpayer Does