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Passive Activity Loss ATG - Exhibit 3.3: Passive Income Decision Tree

Publication Date - December 2004

NOTE: This guide is current through the publication date. Since changes may have occurred after the publication date that would affect the accuracy of this document, no guarantees are made concerning the technical accuracy after the publication date.

Exhibit 3.3: Passive Income Decision Tree

Does income belong on Form 8582, i.e. is it truly passive income?

Decision Tree

If the answer is yes to any of the following, income on Form 8582 lines 1a or 3a is not passive income:

  • Interest (except self-charged interest), dividends, royalties or gains on stocks and bonds
  • Income from something other than a rental or business activity
  • Income from a business where the taxpayer works, i.e. materially participates
  • Income from a business in which the taxpayer materially participated any 5 of the prior 10 years 

If the answer is no, income generally is passive income.

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Page Last Reviewed or Updated: 08-Nov-2016