Ordinary income is any income other than capital gains income. This includes, but is not limited to, wages, commissions, tips, corporate profits, rents collected, bonuses, and others. In contrast, income that is not considered ordinary income is capital gains. A capital gain income includes the sale of a primary residence, for instance. This should not be confused with a real estate investor, developer, or land owner who has multiple properties. The properties owned, if more than one, is considered one’s inventory and does not fall under a capital asset because, in this scenario, real estate is considered business.
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