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passive activity

Defined in 2 places of the United States Code.

Except as provided in paragraph (7), the term “passive activity” includes any rental activity.

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For purposes of this paragraph, the terms “activity”, “passive activity”, and “materially participate” have the meanings given such terms by section 469.

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The term “passive activity” means any activity—

(A) which involves the conduct of any trade or business, and

(B) in which the taxpayer does not materially participate.

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