### Question
How is the term passive investment income defined?


### Answer
The term **passive investment income** is defined in *26 U.S.C. § 1362* as the following:

> gross receipts derived from royalties, rents, dividends, interest, annuities, and sales or exchanges of stock or securities (gross receipts from such sales or exchanges being taken into account for purposes of this paragraph only to the extent of gains therefrom)

#### Citation:
  - *26 U.S.C. § 1362*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter S-Tax Treatment of S Corporations and Their Shareholders > PART I-IN GENERAL**

