Specifically passive activity gross income is income derived from work in which the taxpayer does not materially participate in. Nonetheless, in most situations this does not include portfolio income. Portfolio income commonly means proceeds attributable to interest, dividends, royalties, and annuities. However, portfolio-type income derived in the ordinary course or business may be passive activity gross income if it is credited to a passive activity.

Additionally, excluded from passive activity gross income are income from: 1) personal service, 2) oil or gas property, 3) intangible property if the taxpayer’s personal effect contributed significantly to the creation of the property, 4) qualified low-income housing projects for any tax year in the relief period, 5) refunds of income or excess profits tax, 6) covenants not to compete, and 7) dividend payments made by the state of Alaska to eligible residents.