Passive Investment Income

Passive Investment Income means:
the gross receipts of an S corporation derived from royalties, rents, dividends, interest income, annuities, and gains from sales and exchanges of stocks and securities. Former IRC (check if this IRC provision is current here) § 1362(d)(3) (D). Passive investment income exceeding 25% of gross receipts for 3 consecutive tax years for an S corporation with prior C corporation earnings and profits may result in the imposition of a penalty tax on the corporation, as well as a possible termination of the S election.

See Dividend in the American Legal Encyclopedia and Dividend in the World Legal Encyclopedia.