Passive income is a rent received on a regular basis, with little effort required to maintain it. It is advocated by some authors, especially by Robert Kiyosaki.
Some examples of passive income are:
* Rental from property;
* Royalties from publishing a book or from a patent;
* Earnings from internet advertisement on your websites;
* Earnings from a business that does not require direct involvement from the owner or merchant;
* Dividend and interest income from owning securities, such as stocks and bonds, are usually referred to as portfolio income, which can be considered a form of passive income;
* Pensions.
Passive income is usually taxable. The American Internal Revenue Service defines passive income as one "generated by activity in which taxpayer did not materially participate". [1] Other financial and govenment institutions also recognize it as an income obtained as a result of capital growth or in relation to negative gearing.
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