Certain income not treated as income from passive activity
In determining the income or loss from any activity—
(A) In general There shall not be taken into account— (i) any— (I) gross income from interest, dividends, annuities, or royalties not derived in the ordinary course of a trade or business, (II) expenses (other than interest) which are clearly and directly allocable to such gross income, and (III) interest expense properly allocable to such gross income, and (ii) gain or loss not derived in the ordinary course of a trade or business which is attributable to the disposition of property— (I) producing income of a type described in clause (i), or (II) held for investment. For purposes of clause (ii), any interest in a passive activity shall not be treated as property held for investment.
(B) Return on working capital For purposes of subparagraph (A), any income, gain, or loss which is attributable to an investment of working capital shall be treated as not derived in the ordinary course of a trade or business.
(A)In general#
There shall not be taken into account—
(i) any— (I) gross income from interest, dividends, annuities, or royalties not derived in the ordinary course of a trade or business, (II) expenses (other than interest) which are clearly and directly allocable to such gross income, and (III) interest expense properly allocable to such gross income, and
(ii) gain or loss not derived in the ordinary course of a trade or business which is attributable to the disposition of property— (I) producing income of a type described in clause (i), or (II) held for investment.
For purposes of clause (ii), any interest in a passive activity shall not be treated as property held for investment.
(A)(i)#
any—
(I) gross income from interest, dividends, annuities, or royalties not derived in the ordinary course of a trade or business,
(II) expenses (other than interest) which are clearly and directly allocable to such gross income, and
(III) interest expense properly allocable to such gross income, and
(A)(i)(I)#
gross income from interest, dividends, annuities, or royalties not derived in the ordinary course of a trade or business,
(A)(i)(II)
(B)Return on working capital#
For purposes of subparagraph (A), any income, gain, or loss which is attributable to an investment of working capital shall be treated as not derived in the ordinary course of a trade or business.