Which type of income is earned from other sources, not tied to employment or primary business?

• A. Compensation income
• B. Business Income
• C. Passive Income
• D. Gross Receipts

Answer: (C)

Understanding income types helps distinguish how money is earned. Compensation income comes from working—your wages or salary. Business income arises from running the main enterprise you operate, where you actively participate. Gross receipts are the total inflows before expenses, not a specific category of income.

Income from other sources that isn’t tied to employment or your primary business is passive income. It includes earnings from assets you don’t actively manage, such as rent from properties, interest and dividends from investments, and royalties. Since you’re not actively working or running the main business to generate that money, it’s considered passive. This is why passive income best fits the description.