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Classify and Briefly Explain the Proper Classification for Each of the Income-Generating

question 122

Essay

Classify and briefly explain the proper classification for each of the income-generating activities below.The classifications are either,"active," "passive," or "portfolio."
a.Ford Motor Company Bond interest.
b.Commissions earned from insurance sales.
c.Sale of Microsoft common stock held as an investment.
d.Income from a limited partnership investment.
e.Rental income from an apartment building and the individual owner does not qualify as a real estate professional.
f.Gain from the sale of rental real estate and the individual owner does not qualify as a real estate professional.


Definitions:

Cash Inflow

Money received by a company from its various activities, including sales, investments, financing, and operational activities.

Required Rate

Required rate refers to the minimum return an investor expects to achieve on an investment to consider it worthwhile.

Rate Of Return

The gain or loss of an investment over a specified period, expressed as a percentage of the investment's initial cost.

Net Present Value

A valuation method that calculates the current worth of a project or investment based on its expected future cash flows.

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