What Are Passive Income?

3. Income Approach...uses capitalization to convert the anticipated benefits of the ownership of property into an estimate of present value.

Capital income is income generated by investing into fixed assets over time, rather than from work done using the asset. If a business sell its property at a profit ,that profit is called capital gain and is taxable according to the period the property was held by the business before it is sold. Examples of capital income are personal savings, bank loans acquired and share issuing by a business etc. Comparing to revenue income, capital income is money invested by the owner himself or herself or other investors to set up the business and it is not a day to day function for the business.

Both Carnegie and McDowell allowance the fact the your revenue is an outcome of your work. In other words, wealth

§ 1.61-1(a) - GI means all income from whatever source derived, unless excluded by law. GI includes income realized in any form, whether in money, property or services.

organization is utilizing its assets to create earnings before interest and taxes are paid. A higher

Income – for an individual, the amount of money received through wages, rents, investments, pensions, and subsidy payments for a given period.

Income trust: the income trust structure involves corporations distributing all or most of their earnings to investors and thereby reduces the corporation’s income tax liability.

Hint : Investors purchase assets based on a rational expectation of a stream of future income.

A theoretical approach to income definition is the concern with the ability to consume. For instance, Sir John R. Hicks states:

Definition: A capital loss that cannot be realized in a given tax year due to passive activity limitations. These losses are therefore "suspended" until they can be netted against passive income in a future tax year. Suspended losses are incurred as a result of passive activities, and can only be carried forward.

An Investment is where there’s 2 ways you can either save your money up till you have the right amount or you can either invest over a long time. Also you could buy something with increasing the value of your profit.

You can earn more money by investing in bonds, stocks, and mutual funds. I was playing The Stock Market Game with my class at school and learned a lot about choosing different kinds of investments. First, as you choose where to invest your money, you have to be careful not to put all your eggs in one basket. Investing money can be very risky. For example, lets say you invest all your savings in one stock, bond or mutual fund and it’s unsuccessful you could lose all your money. You lose time as well. A good idea is to decide how much money you want to put into each invest. Consider how much risk you can afford to take.

a) Profit Sharing: return of some company’s profit to employees in the form of cash bonus or retirement supplement.

Definition: In an active portfolio strategy, a manager uses financial and economic indicators along with various other tools to forecast the market and achieve higher gains than a buy-and-hold (passive) portfolio.

Residual income is an alternative to ROI. It is the amount of income earned in excess of a predetermined minimum rate of