Series 7 Exam Question 395: Answer and Explanation

Question: 395

Income derived from an investment in a real-estate limited partnership is termed

• A. earned income
• B. passive income
• C. portfolio income
• D. capital gains

Correct Answer: B

Explanation:

B. Any income derived from an investment in a limited partnership is termed passive. Passive gains can only be written off against passive losses. Earned income includes money made from salary, bonuses, tips, and so on. Portfolio income includes money made from interest, dividends, and capital gains made from investing in securities.