The equipment leasing exclusion also isn’t available for leasing activities related to other at-risk activities, such as motion picture films and video tapes, farming, oil and gas properties, and geothermal deposits. For example, if a closely held corporation leases a video tape, it can’t exclude this leasing activity from the at-risk rules under the equipment leasing exclusion.
However, you should pick a niche and blog about that. If you're launching a money related blog, maybe it'll be about how to make money in real estate or simply how to make money online. Pick the niche and stick to it. If it's a diet and fitness related blog, maybe the niche is the Ketogenic diet, the Atkins diet or some other form of diet or fitness.
The loss of the entire SBD limit would cost an Ontario CCPC about $65,000 in additional annual corporate taxes ($500,000 x 13% increase in the corporate tax rate). However, once income is paid out by way of dividends from the CCPC, the analysis we have reviewed suggests that the combined personal and corporate tax burden will increase by only about 1% as compared to the current tax regime.
I guess I just don’t understand why the specific importance of focusing on “dividends” instead of focusing on the total return of your investment, including stock appreciation. I don’t really care if a company decides to issue a dividend or not; presumably, if they don’t issue a dividend, then they’re doing other things to increase the value of the company, which will be reflected in the stock price of the company. As an investor, I can make money by selling a percentage of my holdings or collecting dividends, and I don’t really care how that’s divided up – it’s an artificial distinction.

“I don’t believe the overnight success exists. There’s a lot of hard work and time involved beforehand,” say Flynn. Angry Birds may have seemed like an overnight success but it was the 52nd game that Rovio created. Flynn says it took him a year or year and a half to build audiences for his most successful sites. (Read these time management expert's tips on the work habits of successful people.)
The U.S. Internal Revenue Service categorizes income into three broad types, active income, passive income, and portfolio income.[1] It defines passive income as only coming from two sources: rental activity or "trade or business activities in which you do not materially participate."[2][3] Other financial and government institutions also recognize it as an income obtained as a result of capital growth or in relation to negative gearing. Passive income is usually taxable.
The main idea behind the new passive income rules is to create a system that taxes businesses proportionally to their overall size and income amount. If you’re mostly dealing with smaller startups and family-run businesses, these new passive income rules will probably have little effect, and may even allow companies more freedom to grow their business.
I agree mostly with the real estate advice. I’m looking for ways to take advantage of the condo I own to get up the rent from ~$0.90/ft to the $1.2-1.5/ft that seems more like the range in the same area. I’d have to put in a bit of capital (probably 10k on the low end for just the basics up to 40k if I wanted to remodel the kitchen and 2 bathrooms up to par with the area), so the return is likely there if those upgrades warrant $1.30/ft (given the unit is larger than most 2br/2ba in the area).
Herbert and Wilma file a joint return, so they’re treated as one taxpayer for purposes of the passive activity rules. The same owner (Herbert and Wilma) owns both Healthy Food and Plum Tower with the same ownership interest (100% in each). If the grouping forms an appropriate economic unit, as discussed earlier, Herbert and Wilma can group Plum Tower's grocery store rental and Healthy Food's grocery business into a single trade or business activity.
Given the growth in the sharing economy, your junk can start to pay for itself. For example, if you have some awesome vintage furniture inherited from your grandmother sitting in a storage unit, you can rent this out to photographers for their “styled shoots” which are becoming all the rage. If your furniture is more modern but you still can’t bear to get rid of it – perhaps a home stager will be interested.

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.
5. Make sure you are properly diversified. Capital preservation is underrated. We saw a lost decade for tech stocks between 2000 and 2010 after the first dot-com bubble burst. It actually took 13 years for Nasdaq investors to get back to even. Investors in the Borsa Istanbul stock market index just gave up 10 years' worth of gains after they saw a plunge in their currency, partially due to increased tariffs by the US and a lack of confidence in the government. Your passive income needs to be properly diversified in order to take the hits.
My goal is to generate enough passive income (ultimately; for the next few years, I’m definitely working for it both with a day job and property managing my investments) to do what I want, when I want, how I want, and where I want. We all define that “what, when, how, and where” differently, and to each of us, financial freedom means something different.

No matter what, if you own something, you will have to put some effort towards it, yes. Even if you are as hands-off as possible, you may need to use your brain occasionally. Although I would say with mine, I might have to use my brain for a total of a 30 minutes or less a year. The only thing I do for my properties are answer emails or calls from my property manager and give him approval to do random things. That doesn’t even happen that often though. The most ‘work’ I ever do on my properties, other than give approval for repairs, is stress if there is a vacancy or turnover or something. Stressing is pretty passive though. Oh, and I spend 20 minutes or less gathering any documents I have for my accountants come tax time.
There are dozens of ways to generate passive income. However, the option you select has to do with two metrics: time and money. Either you have a lot of time or a lot of money. Most people usually don't have both. But, if you have a lot of money, generating passive income almost instantly is easy. You can buy up some real estate and begin enjoying rental income. Or, you can invest in a dividend fund or some other investment vehicle that will begin generating a steady income for you.

Logan is a CPA with a Masters Degree in Taxation from the University of Southern California. He has been featured in publications such as Debt.com. He has nearly 10 years of public accounting experience, including 5 with professional services firm Ernst & Young where he consulted with multinational companies and high net worth individuals on their tax situations. He launched Money Done Right in 2017 to communicate modern ideas on earning, saving, and investing money.


Index funds provide you with a way to invest in the stock market that is completely passive. For example, if you invest money in an index fund that is based on the S&P 500 Index, you will be invested in the general market, without having to concern yourself with choosing investments, rebalancing your portfolio, or knowing when to sell or buy individual companies. All that will be handled by the fund which will base the fund portfolio on the makeup of the underlying index.
You don’t have to limit yourself to one or two solutions or vendors. Financial products are packaged by investment analysts and then sold by salespeople. Do your own research and find products that match your needs, instead of blindly accepting what your financial advisor loves – products that generate huge commissions for themselves at the expense of ignorant clients.

Track Your Wealth For Free: If you do nothing else, at the very least, sign up for Personal Capital’s free financial tools so you can track your net worth, analyze your investment portfolios for excessive fees, and run your financials through their fantastic Retirement Planning Calculator. Those who are on top of their finances build much greater wealth longer term than those who don’t. I’ve used Personal Capital since 2012. It’s the best free financial app out there to manage your money.
The IRS defines depreciation losses as “allowances for exhaustion, wear and tear (including obsolescence) of property.” According to their website, “You begin to depreciate your rental property when you place it in service. You can recover some or all of your original acquisition cost and the cost of improvements by using Form 4562, Depreciation and Amortization, (to report depreciation) beginning in the year your rental property is first placed in service, and beginning in any year you make improvements or add furnishings.”
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!
​Self Publishing is mainstream today. When you purchase an eBook off of Amazon there’s a pretty good chance you’re buying a self-published book. Self-publishing is also ridiculously easy. I tried this a few years ago and couldn’t believe how simple the process was. To self-publish a book you’ll first need to write and edit it, create a cover, and then upload to a program such as Amazon’s Kindle Direct Publishing. Don’t expect instant success though. There will need to be a lot of upfront marketing before you can turn this into a passive income stream.
According to Uncle Sam, you need to be "materially involved" in an enterprise to earn active income. With passive income, it's just the opposite, as the IRS deems you to be earning passive income if you're not materially involved with a profit-making enterprise. By and large, expect income to be taxable if you are engaged in a passive income enterprise. You will need to report earnings to the IRS.

Those who don't meet this test can qualify for a limited $25,000 allowance for losses if they qualify as an active participant. Active participation requires only limited activities, such as approving new tenants, setting rental terms, and approving payouts. If you qualify, you can then take up to that limited amount of loss each year, carrying over any excess losses until you generate rental income to offset it.
According to Uncle Sam, you need to be "materially involved" in an enterprise to earn active income. With passive income, it's just the opposite, as the IRS deems you to be earning passive income if you're not materially involved with a profit-making enterprise. By and large, expect income to be taxable if you are engaged in a passive income enterprise. You will need to report earnings to the IRS.
This publication discusses two sets of rules that may limit the amount of your deductible loss from a trade, business, rental, or other income-producing activity. The first part of the publication discusses the passive activity rules. The second part discusses the at-risk rules. However, when you figure your allowable losses from any activity, you must apply the at-risk rules before the passive activity rules.

Social Security retirement benefits may or may not be taxable depending on your annual income. If your annual income is more than $34,000 as a single taxpayer or $44,000 as a joint filer, up to 85 percent of your Social Security may be included in your ordinary income and taxed at your normal income tax rate. If your income is under $25,000 as a single taxpayer or $32,000 as a joint filer, you don't pay tax on Social Security benefits. If your income is between $25,000 and $34,000 as a single filer or $32,000 and $44,000 as a joint filer, up to 50 percent of your benefits are taxable.


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).
Hello from the UK! Fundrise and Wealthfront are only available to US residents it seems :(. Any other readers from the UK here? The only thing I have managed to do from Sam’s list is getting a fixed rate bond (CBS is having a 5-year fixed rate at 2.01% – not great but the best I could find ). Don’t know if the FIRE movement will ever take off here but would love to trade tips/ideas on how to reach FI and have the freedom to consider alternative rythms to living.

You may already know there is a difference and you may know generally what that difference is, but it’s likely you don’t truly grasp the implications of those differences. For the record, there is nothing wrong with either of them. But if you want to maximize your returns down the road, you do want to make sure you really do have a solid feel for how these two differ.


The PPACA Medicare tax is a dangerous tax IMHO. It is an entirely new kind of tax. It is small and in jeopardy of going away but I predict it won’t. If it goes away it won’t be for long and it will grow over time – like most taxes. 3.8% is a starting point. This one has the added political appeal of “taxing the rich” and “unearned income” that makes it more palatable to the electorate.
You can’t start charging right off the bat without your audience knowing anything about the value you offer (though you could still indirectly earn money from them with the right ads). “The best way to go in terms of a long-term passive income business [is] delivering value and information for free, and therefore establishing expertise, knowledge and trust with your audience,” says Flynn.
The big difference in Real Estate is leverage which can be either good or bad depending on your timing and wiliness to stay long term and ride out the dips. Think about having one million dollars in single family California Real Estate in 2012, in November 2013 it’s now worth 30-50% more, timing is important but staying in the game long term is what it’s about.
This world is a dangerous place to live, not because of the good people that often act in irrational and/or criminally wrongdoing ways within the confines of their individual minds, core or enterprise groups, but because of the good people that don’t do anything about it (like reveal the truth through education like Financial Samauri is doing!). Albert Einstein and Art Kleiner’s “Who Really Matters.”
Rentals, just like stocks, throw off cash. With rentals we call that cash “rent”, and with stocks we call it dividends. A significant difference however is that the S&P 500 has appreciated at ~6% per year (above inflation) for the last 100 years…..Real Estate has had almost 0 growth above inflation. So are rents higher than dividends? Maybe, maybe not. But unless you got one heck of a deal, the delta in rent over dividends will have a very tough time making up for the 6% per year difference in appreciation.
However, this comes back to the old discussion of pain versus pleasure. We will always do more to avoid pain than we will to gain pleasure. When our backs are against the wall, we act. When they're not, we relax. The truth is that the pain-versus-pleasure paradigm only operates in the short term. We'll only avoid pain in the here and now. Often not in the long term.
The average period of customer use of the property is 7 days or less. You figure the average period of customer use by dividing the total number of days in all rental periods by the number of rentals during the tax year. If the activity involves renting more than one class of property, multiply the average period of customer use of each class by a fraction. The numerator of the fraction is the gross rental income from that class of property and the denominator is the activity's total gross rental income. The activity's average period of customer use will equal the sum of the amounts for each class.
Passive income differs from active income which is defined as any earned income including all the taxable income and wages the earner get from working. Linear active income refers to one constantly needed to stay active to maintain the stream of income, and once an individual chooses to stop working the income will also stop, examples of active income include wages, self-employment income, martial participation in s corp, partnership.[4] portfolio income is derived from investments and includes capital gains, interest, dividends, and royalties.[5]
Another way to generate passive income is to invest and be a silent partner in a business. This is very risky, but with risk comes the potential for high returns. For example, several years ago both Lyft and Uber were looking for private investors to invest in their companies. Today, they are worth billions - but you as an investor would only reap that benefit if they go public via an IPO, or get acquired. So, it's risky.
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