Open up the app store and click on your competing app. Sort by “Most Critical”. See what customers have to say. Here’s an example. The top 2 complaints are about syncing issues and ipad compatibility. Those would be the first items you would consider when creating your version. Don’t fall in the trap of copying another app. Also it’s not about copying anything or anyone. Don’t get this mixed up. It’s rare that anyone invents something that is completely revolutionary. It’s usually taking an existing idea and improving it. Our example is taking a meal planning and grocery shopping and porting it to a convenient app. There is already a version on the web and the developer released it on a different platform. The mobile platform.
We know from years of feedback from readers, amazon sellers, and family and friends what most people want in a passive income. The Independently published top 10 passive incomes is exactly that – it’s a simple passive income that hits all the right notes. Whether you have any experience or not, this book will help guide you on how to create passive income with little to no start up costs. A proven list of ways to create passive income starting with less than 500. When it comes to finding a optimal passive income, the Independently published top 10 passive incomes is definitely your first choice.

A planning opportunity may be available by converting a primary residence into rental real estate.  For example, Mary purchases a condo in 2010 and in 2013 decides to upgrade into a single family home.  She rents out the condo to earn some money.  Due to recent developments in the area, the condo is now worth much more and she sells it for a gain of $100,000.  Since Mary lived in the home for 2 out of the past 5 years, the entire gain is excluded from income.  The 2 year rule can occur anytime during the 5 year period and does not have to be consecutive.  Keep in mind though that if you do the opposite and convert rental property to a primary residence, the rules are more complex and the gain exclusion tends to be limited.
I think you should use Financial Samurai to raise your passive income. You’ve already proven that you writing 3 articles a week is enough to not only sustain the site but grow it. Why not have more guest writers post articles? Since you started with the extra post each week I’m guessing traffic is above your normal growth rate. Leverage that up with more posts and my bet traffic will continue to grow.
Another thing that belongs firmly at the top of passive income ideas lists is affiliate marketing, where you earn a commission for each product or service that you recommend. My new focus these days is on Amazon affiliate websites. The idea is that you talk about, or review products that you can find on Amazon. People visit your website, click on some of your Amazon affiliate links, buy a product on Amazon and you get a commission for any sales, not only for that specific product but for anything they buy within a 24-hour period.
Despite the anger expressed by the tax community and business owners across the country, the government reiterated in October 2017 its intention to move forward with the proposed passive income rules and promised that further details will be revealed as part of the 2018 budget. February 27, 2018 was the date that the so anticipated federal budget was released and to the surprise of tax practitioners and private business owners, the government completely abandoned its July 2017 passive income proposals. The 2018 budget instead proposes to further restrict the access to the small business deduction (which will not be discussed here) and to refine the refundable taxes regime applying to CCPCs. The proposed new refundable taxes regime is less complex and less costly than the framework suggested by the July 2017 proposals, however, Finance proposes to limit another type of tax deferral allowed prior to the budget as discussed in more details below.
Peer-to-peer lending means loaning money to other people. Specifically, you lend money to people who don’t qualify for traditional financing. Companies like Lending Club and Prosper offer returns in the range of 4-10%, which are a lot higher than a typical saving account. You will be able to select the right investment for you, based on your risk assessment strategy.
Earned income is the money you earn from working. It includes wages, salaries, tips, and net earnings from self-employment income. It also includes union strike benefits and some types of long-term disability benefits. With some types of deferred compensation plans, the payments are also considered a form of earned income. Earned income is taxed differently than unearned income.
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I have already come up with 50 ways that a management company can screw you for profit without you ever knowing(or not finding out for awhile). Did you have an inspection before you made an offer on the property? Do you have a picture of the property you bought? How do you know if that picture shows the house you actually own? or if it even hows the ‘current’ state of the house you own?
Passive income differs from active and portfolio income. However, despite its name, passive income doesn’t always mean you can sit back idly while you earn money. In fact, the IRS also includes in its definition of passive income as “net rental income” and sometimes self-charged interest. This means to begin earning passive income, you’ll need to invest some time and/or money at least at the start. Because the IRS still views it as income, that means passive income is subject to taxation.
In the case of an activity with respect to which any deductions or credits are disallowed for a taxable year (the loss activity), the disallowed deductions are allocated among your activities for the next tax year in a manner that reasonably reflects the extent to which each activity continues the loss activity. The disallowed deductions or credits allocated to an activity under the preceding sentence are treated as deductions or credits from the activity for the next tax year. For more information, see Regulations section 1.469-1(f)(4).

P2P lending started in San Francisco with Lending Club in mid-2000. The idea of peer-to-peer lending is to disintermediate banks and help denied borrowers get loans at potentially lower rates compared to the rates of larger financial institutions. What was once a very nascent industry has now grown into a multi-billion dollar business with full regulation.

But how exactly can you generate passive income? Some methods for earning passive income require very little work on your part. Investing, whether in the stock market or with a bank, is the best way to make your money grow with very little ongoing effort. It just takes a different type of discipline – the discipline to spend less than you make and resist investment decisions based on emotions.
A good portion of my stock allocation is in growth stocks and structured notes that pay no dividends. The dividend income that comes from stocks is primarily from S&P 500 index exchange-traded funds. Although this is a passive-income report, as I'm still relatively young I'm more interested in building a large financial nut through principal appreciation rather than through dividend investing. As an entrepreneur, I can't help but have a growth mindset.
But then figure out your unique selling proposition, what advantage you can offer that the market currently lacks. “My advantage in the passive income marketing space is that I’m not afraid to share my failures or where my income comes from,” says Flynn, who details his impressive income every month. “Transparency is huge,” he says. Referring to the personal bio on his LEED exam site, he says, “You might think I’m not benefitting from putting my story on there, but it helps me establish a relationship with people there. I’m someone who went through the same experience people went through on the site.”
stREITwise offers a hybrid investment between traditional REIT fund investing and the new crowdfunding. The fund is like a real estate investment trust in that it holds a collection of properties but more like crowdfunding in its management. The fund has paid a 10% annualized return since inception and is a great way to diversify your real estate exposure.
Keep in mind, many questions can be answered on IRS.gov without visiting an IRS Tax Assistance Center (TAC). Go to IRS.gov/LetUsHelp for the topics people ask about most. If you still need help, IRS TACs provide tax help when a tax issue can’t be handled online or by phone. All TACs now provide service by appointment so you’ll know in advance that you can get the service you need without long wait times. Before you visit, go to IRS.gov/TACLocator to find the nearest TAC, check hours, available services, and appointment options. Or, on the IRS2Go app, under the Stay Connected tab, choose the Contact Us option and click on “Local Offices.”
The second withholding amount is for Medicare tax. This tax is 2.9 percent of all wages. Again, this tax is jointly the responsibility of the employee and the employer, with each paying 1.45 percent. Unlike the Social Security tax which has an earnings cap, this tax does not. Any wages or other forms of earned income are considered subject to this tax. If self-employed, you pay the full 2.9 percent. These payroll taxes are used to fund Social Security benefits and Medicare benefits.

I actually spent a year and a half working as an affiliate marketer (mostly selling drumming related products – lessons, kits ect). 5 years on and one of my one page sites (which I’ve not touched) still nets me about $150 a month. I won’t be retiring off that but only really now appreciate the reverse pyramid approach to entrepreneurship (working for nothing initially but later being paid without effort!)
​Udemy is an online platform that lets its user take video courses on a wide array of subjects. Instead of being a consumer on Udemy you can instead be a producer, create your own video course, and allow users to purchase it. This is a fantastic option if you are highly knowledgeable in a specific subject matter. This can also be a great way to turn traditional tutoring into a passive income stream!
The current laws don’t really distinguish between active and passive income. Since passive income is already taxed at a lower rate, companies can use dividends as a way to gain a tax advantage by paying dividends out of active (and lower-taxed) income rather than passive income. Business owners will now have to prove they’re paying dividends out of investment income, which will make it more difficult to game the system by getting a double deduction on lower-taxed dividends. Some business owners use dividends as a method of retirement savings. If your small business clients get their household income from dividends, talk to them about alternative strategies, such as setting up payroll and switching to a salary. While salaries are taxed at a higher rate, they’re also helpful for retirement savings as they involuntarily trigger Canada Pension Plan contributions.

Finally, I imagine the biggest debate with my ranking is Creating Your Own Product as the #1 passive income source. If most people have never created their own product, then it’s easy to give it a thumbs down. There won’t be much complaint about Private Equity Investing being in last place because most people are not accredited investors. But given I believe that plenty of people can create their own product if they try, pushback is inevitable because a lot of people simply don’t try!
To the uninformed, these varying tax rates initially look unfair. What many people don’t understand is the big difference between “ordinary income” (from wages, a salary, short-term capital gains and interest) and “passive income” (from stock dividends and long-term capital gains). The federal government taxes ordinary income at up to 35 percent and passive income at 15 percent.
In June, he put ads on his site with Google Adsense, and within the first hour, earned $1.08 with three clicks. He earned $5 the first day, $7 the second, and then eventually began pulling in $15-$30 a day. In October, he created an ebook exam study guide priced at $19.99. By month’s end, he earned $7,906.55 — more than he had ever previously earned in a month.
When money is lent to a partnership or S-corporation acting as a pass-through entity (essentially a business that is designed to reduce the effects of double taxation) by that entity’s owner, the interest income on that loan to the portfolio income can qualify as passive income. As the IRS language reads: "Certain self-charged interest income or deductions may be treated as passive activity gross income or passive activity deductions if the loan proceeds are used in a passive activity."

Creating original content that other people love can be very rewarding to you from a personal growth perspective (people value something you have created) and from a financial perspective (people are willing to pay you for it).  You create something once, but keep getting paid a royalty for it long after you completed it.  Music is a nice example.  You write/perform the song once, and then sell it online.  Each time someone downloads your song you are paid a percentage of that sale, what a nice way to generate passive income!
A REIT is a company that owns, operates or finances real estate and allows anyone to invest in portfolios of real estate assets, the same way as stocks: you can purchase individual stock or exchange-traded fund (ETF). You can then earn a share of the income produced through the real estate investment without having to own, manage or finance a property.

4. Home Office: Passive income investors, not unlike most professionals that work from home, are allowed to deduct their home office; provided it meets the minimal criteria. What’s more, this deduction helps both renters and homeowners. You can deduct your home office whether you on the home it is in or are simply renting it. However, like every other deduction on this list, the home office must meet certain requirements to qualify for a deduction.
I wish I had more time to put into real estate. Given the run up since 2012, I may even be interested in selling my condo that I currently rent out. I need to get it appraised to really see what it’s worth, but I think conservatively it’s gone up ~50%, although rent is probably only up ~10% or so. I am bullish on rents going up in the future… mostly in line with inflation, or perhaps even slightly faster due to constricted credit and personal income growth which should provide a solid supply of renters. At this point, I just don’t want to manage the property. I’ll probably look into a property manager as my time is likely worth turning it into a nearly passive investment.

4. Home Office: Passive income investors, not unlike most professionals that work from home, are allowed to deduct their home office; provided it meets the minimal criteria. What’s more, this deduction helps both renters and homeowners. You can deduct your home office whether you on the home it is in or are simply renting it. However, like every other deduction on this list, the home office must meet certain requirements to qualify for a deduction.


One of the latest trends is crowdfunding / syndications where money is pooled together to directly invest in various real estate properties.  You do not get quite the variety and diversification you would in a REIT but it provides an opportunity to invest a smaller amount of money than purchasing a property directly.  Usually, you are a limited partner in a partnership.  Since you are not materially involved in the day to day activities, the income generated is passive income.
I’m a 45 year old business owner who also has focussed on diversifying my income streams. I have a short term vacation rental in Florida that I bought for $390k in 2012 and net rental income for the last three years has been growing steadily. 2015 I am at $70k gross right now but should end up at $80-85k with net around $45k plus we use the place about 35 nights a year.
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The challenge I’m facing and, I know it’s a good problem, is that the SF real estate has shot up about 35% in the last couple years. I’m sure you’re experiencing the same thing! So as the net worth is rising, the yield on the total portfolio is going down. Right now, it seems the only way to increase the passive income will be to raise the rent in December and to invest some of that cash in stocks, which I’m nervous to do in this market. Current allocation:
If any amount of your distributive share of a partnership's loss for the tax year is disallowed under the basis limitation, a ratable portion of your distributive share of each item of deduction or loss of the partnership is disallowed for the tax year. For this purpose, the ratable portion of an item of deduction or loss is the amount of such item multiplied by the fraction obtained by dividing:
I am 30 years old and am retired. Previously, I made a modest salary as an Army officer. I own three duplexes and a quadplex in central Texas (10 rental units in all), and each of the properties provide me with net rental yields in excess of 15%. The last deal is actually an infinite return as my partner paid the down payment in return for a 50/50 split on a property that would otherwise provide a net rental yield of 18%. The above net rental yields also factor in an excellent property management team who manages my properties while I pursue other investment opportunities. To date, I have never interacted with any of my tenants nor have I ever had to personally deal with any maintenance issues.

With the objective of circumventing this 4% tax deferral, the 2018 federal budget proposes, with certain exceptions, to limit the access to the RDTOH pool in circumstances where the dividend paid by the corporation is a dividend that is an Eligible Dividend. The idea here is to align the refundable tax paid on passive income with the payment of dividends sourced from that passive income. The new measures apply for taxation years starting after 2018 and will require the tracking of two RDTOH pools for CCPCs.
Secondly – and this is just quibbling – I’d change that risk score. The risk of private equity is incredibly high and should be considerably riskier than bonds! You are providing a typically very large amount of capital to one business that you agree to have no control over, and the success or failure of that business over a locked, predefined term determines your return. And in the few deals I’ve negotiated for clients, my experience has been that there are often management fees, performance fees, etc. that may cut into your potential gains, anyway. You’re putting a lot of eggs in one basket, and promising an omelet or two to the management no matter what. You really need to be confident that you found the next Uber before you take this giant risk!
Most credit card companies offer sign-up bonuses to entice you to open a credit account with them. As long as you don’t spend money just to hit the minimum balance and always pay your balance on time, this can have a minimal impact on your credit score while earning you hundreds – or even thousands – of dollars a year. Some of the best travel credit cards offer 100,000 points to new accounts when you meet reasonable spending requirements.
Get Paid To Shop: The Shopkick app is a free mobile app that pays you walk into stores, link your credit card, scan barcodes in stores, shop online, refer friends and more. Convert points into gift cards and other cash prizes. This app makes shopping fun, and you even get a 250-point bonus when you sign-up as a new member. The best part? It's 100% FREE to join.

Herbert and Wilma are married and file a joint return. Healthy Food, an S corporation, is a grocery store business. Herbert is Healthy Food's only shareholder. Plum Tower, an S corporation, owns and rents out the building. Wilma is Plum Tower's only shareholder. Plum Tower rents part of its building to Healthy Food. Plum Tower's grocery store rental business and Healthy Food's grocery business aren’t insubstantial in relation to each other.
Pursuing passive income can be the right move for you, especially if you just need some extra cash to pay off debts. It’s important, though, that you find the right side hustle for you and your lifestyle. There’s no point in creating passive income if it’s not passive at all. Decide how much time and money you have to spare. Then choose the passive income venture that will prove most worthwhile.
Passive income, in a nutshell, is money that flows in on a regular basis without requiring a substantial amount of effort to create it. The idea is that you make an upfront investment time and/or money but once the ball is rolling, there's minimal maintenance required going forward. That being said, not all passive income opportunities are created equally. For investors, building a solid portfolio means knowing which passive investing strategies to pursue.
It's a little awkward, so we'll get straight to the point: This Thursday we humbly ask you to defend Wikipedia's independence. We depend on donations averaging about $16.36, and only ask you for one gift a year. But 98% of our readers in the U.S. are not responding to our messages, and time is running out to help in 2018. If everyone reading this gave $2.75, we could keep Wikipedia thriving for years to come. The price of your Thursday coffee is all we need. People warned us not to make Wikipedia a non-profit. But if Wikipedia were commercial, it would be a great loss. Wikipedia unites all of us who love knowledge: contributors, readers and the donors who keep us thriving. The heart of Wikipedia is a community of people working to bring you unlimited access to reliable information. Please take a minute to keep Wikipedia growing. Thank you.
If the amount you had at risk in an activity at the end of your tax year that began in 1978 was less than zero, you apply the preceding rule for the recapture of losses by substituting that negative amount for zero. For example, if your at-risk amount for that tax year was minus $50, you will recapture losses only when your at-risk amount goes below minus $50.
Investing in rental properties: Another form of real estate investment, rental investments (i.e. becoming a landlord) could steer you down the passive income path of steady monthly rent checks that you can use to pay off a mortgage loan on the rental property. After the mortgage is paid off, those monthly checks go right into your bank account -- potentially for years to come. 
No one should turn down wind farming’s ultimate passive income for the next 30 or more years … even 60 years when there is a positive cash flow on the sum total of all base payments when computing inflation for the next 60 years based on the previous 60 years, as long as the next era’s energy resource is not perfected (at which time they would not renew the option for the second 30 years).

For 2017, passive income that is taxed as ordinary income will be taxed in the 2017 tax brackets, and so the income tax rates range from 10 to 39.6 percent depending on your annual income. Long-term capital gains and qualified dividends are taxed at zero, 15 and 20 percent for 2017, but the brackets are different. So you can earn up to $37,950 in the 2017 tax year without paying taxes on these gains; if you earn between $37,950 and $418,400, the gains are taxed at 15 percent; and if you earn more than $418,400, your gains are taxed at 20 percent.

Take for example a situation where a CCPC earns rental income from its real estate properties which for this example qualifies as passive investment income and provides, at the same time, property management services that are characterized as active income. Under the current regime, a portion of the high corporate income tax paid by the corporation of 50% on its rental operations is accumulated in its RDTOH and will be refunded by the government only upon the payment of a dividend by the corporation to its individual shareholder. Given that an Eligible Dividend paid out of the property management services are taxed at a lower rate than would be a dividend paid out of the rental income, being a dividend that is not an Eligible Dividend, the company would decide to pay the Eligible Dividend and recover the RDTOH generated from its passive income. The profits generated from the rental operations could be paid to the shareholder the following year or two for example as a dividend that is not an Eligible Dividend, thus providing for a deferral of that additional 4% personal income tax.
I wanted these freedoms so I began pursuing a means to have those, which in my case ended up being starting my own company that I could work from anywhere and with no deadlines whatsoever (although the no deadline thing does make things hard sometimes). The income from that company is planned to continue buying more passive income investments so eventually I hit total financial freedom where I can keep living my current lifestyle minus the work part. All of this is called “lifestyle design.”

Depending on the level of AAII otherwise earned in a particular year, you may wish to consider investments that lean towards growth rather than annual interest or dividend income, as you may better be able to time the recognition of a capital gain. In addition, since capital gains are only 50 per cent taxable, it would take $100,000 of realized capital gains to generate $50,000 of passive income that is counted towards the AAII test.


Under the new rules, the active income a business is allowed to claim at the small business amount is tied to the business’ passive income. Businesses with less than $50,000 in annual passive income can claim the full $500,000 at the 9% small business rate. The amount eligible for the small business rate shrinks by $5 for every $1 over $50,000 that a business makes in passive income, until it eventually reaches zero.
Real estate rental income is one of the best passive income opportunities I’ve taken advantage of. When you buy a rental property, you are buying a home, apartment building or commercial building, then renting it out to someone who cannot afford to buy it themselves. It is a win-win for everyone. They get a nice place for a reasonable price and you get a property that is being paid for by the tenant.
You actively participated in a rental real estate activity if you (and your spouse) owned at least 10% of the rental property and you made management decisions or arranged for others to provide services (such as repairs) in a significant and bona fide sense. Management decisions that may count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and other similar decisions.
However, equipment leasing doesn’t include the leasing of master sound recordings and similar contractual arrangements for tangible or intangible assets associated with literary, artistic, or musical properties, such as books, lithographs of artwork, or musical tapes. A closely held corporation can’t exclude these leasing activities from the at-risk rules nor count them as equipment leasing for the gross receipts test.
“There is no such thing as 100% passive income,” says Flynn. “Even with real estate you still have to manage your properties, or even with the stock market, which is potentially passive income, you still have to manage your portfolio. With online business, there is no such thing as 100% passive income — and this is coming from a guy with a blog called SmartPassiveIncome.com. The definition of passive income is ‘building these businesses of automation,’ but in order to keep them automated and keep that trust going with your audience on top of that, you do have to keep it up every once in a while — so a lot of time upfront and a little time after. But there is alway time involved.”
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First: I understand why you would say that such investments are restricted to only accredited investors, because generally, that’s true. There are means, under federal securities regulations and Blue Sky laws in each state, to sell interests to non-accredited investors – but usually those means are so heavily regulated and involve disclosures so similar to cumbersome registration requirements that it is not worth it for the seller to offer to non-accredited investors.
For purposes of item (1), above, an item of deduction arises in the taxable year in which the item would be allowable as a deduction under the taxpayer's method of accounting if taxable income for all taxable years were determined without regard to the passive activity rules and without regard to the basis, excess farm loss, and at-risk limits. See Coordination with other limitations on deductions that apply before the passive activity rules , later.
If any amount of your pro rata share of an S corporation's loss for the tax year is disallowed under the basis limitation, a ratable portion of your pro rata share of each item of deduction or loss of the S corporation is disallowed for the tax year. For this purpose, the ratable portion of an item of deduction or loss is the amount of such item multiplied by the fraction obtained by dividing:
As a result of this tax rate differential, the owner of a CCPC is almost always better off retaining corporate earnings and investing within their corporation. While a similar amount of combined corporate and personal tax is ultimately paid by business owners when monies are withdrawn through dividends, taxes can be deferred until such time as the money is required personally. This effectively allows business owners to temporarily obtain the benefit of investing a larger amount of money than would otherwise be available if they earned the money personally or immediately withdrew profits from their corporation.
Everyone knows how profitable the right passive income property in the ideal location can be, but the same properties often coincide with more impressive tax benefits and deductions. However, far too many investors overlook the deductions they can make when it comes time to file their taxes. Having said that, approaching tax season with an acute attention to detail and an understanding of the deductions awarded to passive income investors can mean the difference between a profitable rental property and losing money on your real estate venture.

However, equipment leasing doesn’t include the leasing of master sound recordings and similar contractual arrangements for tangible or intangible assets associated with literary, artistic, or musical properties, such as books, lithographs of artwork, or musical tapes. A closely held corporation can’t exclude these leasing activities from the at-risk rules nor count them as equipment leasing for the gross receipts test.


There are three main categories of income: active income, passive income and portfolio income. Passive income has been a relatively loosely used term in recent years. Colloquially, it’s been used to define money being earned regularly with little or no effort on the part of the person receiving it. Popular types of passive income include real estate, peer-to-peer (P2P) lending and dividend stocks. Proponents of earning passive income tend to be boosters of a work-from-home and be-your-own-boss professional lifestyle. The type of earnings people usually associate with this are gains on stocks, interest, retirement pay, lottery winnings, online work and capital gains. 

What I find most interesting is the fact that I had never considered options like LendingTree or realityshares for other income sources. Investing in property has been too much of bad luck for people that I know personally, so I am interesting in getting involved in a situation where I would have to be dealing with maintenance issues or tenants. There are services for you to do that, but I had not come across any that didn’t eat most if not all of the earnings. Then again, I live in the NY area. Investing in the midwest would not be reasonably possible for me, directly, but reading about realityshares is something I am going to look into further. That might be a real possibility.
As a general rule, the passive activity loss rules are applied at the individual level. Although Internal Revenue Code Section 469 was enacted to discourage abusive tax shelters, its impact extends far beyond shelters to virtually every business or rental activity whether reported on Schedules C, F, or E, as well as to flow through income and losses from partnerships, S- Corporations, and trusts. Generally, the law does not apply to regular C-Corporations although it does have limited application to closely held corporations.

In February 2007, Pat Flynn was working at an architecture firm making $38,000 a year. He mulled boosting his earning power by getting an architecture license, but the process would likely take six to eight years. When he heard about getting a credential in sustainable design and environmentally friendly building called Leadership in Energy and Environmental Design (LEED), he decided to go for that, as no one in his department had it. The one problem? The exam was so challenging, just one-third of test-takers passed.
Employees and self-employed people have to pay federal income tax on earnings related to work, but the government also imposes income tax on various sources of passive income. Passive income or unearned income describes income that does not require active work, such as interest credited to savings accounts and investment income. The federal income tax rate on unearned income varies from one type of passive income to another. Note that the tax rate for passive income will differ for the 2018 tax year, as the new tax bill signed in December, 2017 changes some of these provisions.
Ali Boone(G+) left her corporate job as an Aeronautical Engineer to work full-time in Real Estate Investing. She began as an investor in 2011 and managed to buy 5 properties in her first 18 months using only creative financing methods. Her focus is on rental properties, specifically turnkey rental properties, and has also invested out of the country in Nicaragua.

Active participation isn’t the same as material participation (defined later). Active participation is a less stringent standard than material participation. For example, you may be treated as actively participating if you make management decisions in a significant and bona fide sense. Management decisions that count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and similar decisions.


The E-Commerce model is an interesting one. The idea is that you get products made cheaply (usually China) through a site like Alibaba, ship them to a warehouse (or your own house!), put the product description up on Amazon (or your own website), get some sales and then send out the product. There is a big learning curve with this one and you need some money up-front to get the products.
If you’re looking for a way to begin gradually replacing your income, these are just some of the best ways you can do it as a physician. Remember the idea of gradual retirement? Passive income streams like the ones mentioned here are perfect ways to allow you to spend more time with family, enjoy your day job more, and, of course, make a little money while you’re at it.
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