Wednesday, November 3, 2010

Examples of Income that is NOT Passive

  • Rental Income from a building leased to a business where the tax payer works - Reg 1.469-2(f)(6)
  • Rental income from leased land - Reg. 1.469-2T(f)(3)
  • Income from land, a building or other property held for investment IRC 469(e)(1)(A)(ii)(II)
  • Gains on stocks or bonds - IRC 469(e)(1)(A)(ii)(II)
  • Royalties - IRC 469(e), Reg 1.469-2T(c)(3)(i)(A)
  • Covenant Not to Compete - Reg. 1.469-2c)(3)(i)(A)
  • Guaranteed Payment from Partnership (K-1 line 4) regardless if tax payer materially participated - Reg 1.469-2(e)(2)(ii)
  • Income from business if taxpayer materially participated in any 5 of the past 10 years - Reg. 1.469-5T(a)(5)
  • Income from a personal service activity if tax payer participated in any of the past 3 years - Reg 1.469-5T(a)(6)
  • Any activitiy in which the spouse materially participated - IRC 469(h)(5)
  • K-1, Line 1 income from a partnership which is considered a trader in stocks and bonds - Reg 1.469-1T(e)(6)
  • Income from an activity whcih is in the business of lending money, financing - Reg 1.469-2T(f)(4)
  • Patents, Copyrights, literary, musical or artistic composition or any other single intangible if tax payer's personal services contributed to the creation - Reg 1.469-2T(c)(7)
  • Stock Exchange seats - not tangible property - IRC 469(j)(8), Reg. 1.469-2T(f)(3)

John R. Dundon, EA - 720-234-1177 - jddundon@comcast.net - http://prep.1040.com/jd/ - Defend Yourself Against the IRS - Enrolled with the United States Department of Treasury to Practice before the IRS - Enrolled Agent # 85353. Under contract with the IRS as a Certified Individual Taxpayer Identification Number (ITIN) Acceptance Agent - I am a Federally Authorized Tax Practitioner (USC 31 Section 330 + IRC 7525a.3.A) regulated under US Treasury Cir. 230.