According to the Internal Revenue Service, capital gains arenot considered passive income. The Internal Revenue Service strictly defines passive income to include only a few revenue streams, and the election to treat capital gains as passive income does not exist.
above is from Zacks.
Capital gains refers to funds received from selling an appreciating asset, like a house or a portfolio of stocks. Passive income informally refers to making money without doing much work, but the Internal Revenue Service has its own definition of passive activity that refers to earnings from specific types of activities, including renting out property. Generally, capital gains and passive activity are treated differently for tax purposes, even though letting an asset appreciate over time is, in the plain sense of the term, a passive activity.
above is from POCKETSENSE
Here is the most common example: A person has some rental properties (passive income). He sells one of the properties at a gain. That would be a passive capital gain.
If the taxpayer had suspended passive losses from other rental properties that were being carried over, that passive gain could offset some of those suspended losses.
if the capital gain was passive the partnership should have included it on line 11I with a notation passive
as you can see there are differing opinions. so in Turbotax, you would have to override or change the reporting from 9a to 11i. this would void the Turbotax accuracy guarantee. if you use overrides for 8582, you will not be able to e-file.
other will probably comment
