Simple English definitions for legal terms
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Passive income is money earned from a business, rental property, or other income-producing activity that the earner does not directly participate in or have immediate control over. It is different from active income, which is earned from one's own labor or active participation in a trade or business.
Examples of passive income include:
These examples illustrate how passive income is earned without the earner having to actively work for it. Instead, the income is generated through investments or other income-producing activities that require little to no effort on the earner's part.