There are three main types of income: active income, passive income and portfolio income. Passive income does not include active income such as earnings from wages or active business participation. Passive income also does not include portfolio income such as income from dividends, interest or capital gains.
It is important to know what type of income and loss is being generated by your business and investment activities. It does you little good to hold investments that are producing passive losses if you have no passive income to offset the losses against. You should review your business and investment portfolio with your tax or investment advisor from time to time to make sure you have the right mix. Call or email me if you have any questions about passive income or loss. Jsenney@pselaw.com or 937-223-1130.