Passive income flows thru an s-corp to the individual owner.

[kgcpa0899]

An S Corp is a silent partner in an active business and receives income that is considered passive due to lack of material participation.  The S-corp then issues a k-1 to the 100% shareholder that runs the S Corp.  Will the 100% shareholder claim the income from the k-1 of its s-corp as active or passive income.

[sjrcpa · Accepted solution]

Passive income leeps its character as it flows through flow through entities.

[PhoebeRoberts]

However, its characterization as active or passive is made at the 1040 level, not the 1120S level.

[sjrcpa]

Agreed