Passive vs Non-Passive activities?

Question

I have a s-corporation which I get salary w-2 125,000 yearly and the remaining Net income (about 25,000) from my s-corp comes to my 1040. Now is the 25,000 should be reported on SchE page 2 as a passive income or non passive income. I know that i have participated in business that's why i get the 125k but the 25k from net should be passive... please help me

Answer 1

No, this is an active trade or business.  It is not passive income.  You could raise your salary to $150,00 and not pay out the $25,000.

You'll have to find another way to generate passive income if you have passive losses you want to offset.