The Tax Reform Act of 1986 gave us the seemingly oxymoronic concept of “passive activities”.  Collecting interest and dividends is not a “passive activity” even thought interest and dividends are considered “passive income” in other areas of tax law, such as the sting tax on S Corporations.  There has to be an activity, such as a trade or business, for you to not materially participate in, in order for you to have passive income or losses under Code Section 469.