Passive Activity

An activity from which you have the potential to profit but in which you do not physically participate.

The income from rental properties is a good example of a passive activity. Making a distinction between passive and active income is important because you can claim a passive loss only against income generated from passive activities. You cannot claim a passive loss against active income.


Investment dictionary. . 2012.

Look at other dictionaries:

  • passive activity — UK US noun [C or U] ► a type of business in which it is possible to make money without being involved in an active way: »He makes most of his money from passive activities such as property rental …   Financial and business terms

  • Passive Activity Loss Rules — A set of rules that prohibits using passive losses to offset earned or ordinary income. Passive activity loss rules prevent investors from using losses incurred from income producing activities in which they are not materially involved. Being… …   Investment dictionary

  • passive activity loss — ( PAL) A loss incurred in participating in passive investing. Bloomberg Financial Dictionary …   Financial and business terms

  • passive — pas·sive / pa siv/ adj: not involving, deriving from, or requiring effort or active participation imposed a passive duty not to interfere; specif: of, relating to, or being business activity in which the investor does not have immediate control… …   Law dictionary

  • passive — As used in law, this term means inactive; permissive; consisting in endurance or submission, rather than action; and in some connections it carries the implication of being subjected to a burden or charge. As to passive debt passive negligence… …   Black's law dictionary

  • passive — [[t]pæ̱sɪv[/t]] 1) ADJ GRADED (disapproval) If you describe someone as passive, you mean that they do not take action but instead let things happen to them. His passive attitude made things easier for me... Even passive acceptance of the regime… …   English dictionary

  • passive — adj. VERBS ▪ be, seem ▪ become ▪ remain ADVERB ▪ extremely, fairly, very …   Collocations dictionary

  • passive — pas|sive [ pæsıv ] adjective ** 1. ) accepting what happens without trying to control or change events or to react to things: a helpless and passive victim Watching television is a relatively passive activity. 2. ) LINGUISTICS in a passive… …   Usage of the words and phrases in modern English

  • passive */*/ — UK [ˈpæsɪv] / US adjective 1) accepting what happens without trying to control or change events or to react to things a helpless and passive victim Watching television is a relatively passive activity. 2) linguistics a passive verb or sentence… …   English dictionary

  • Passive nuclear safety — describes a safety feature of a nuclear reactor that does not require operator action or electronic feedback in order to shut down safely in the event of a particular type of emergency (usually overheating resulting from a loss of coolant or loss …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.