@AmyC wrote:
@DDT1345 a loan would be passive income. If you were doing big business, you would probably be an S-corp.
I have to express my disagreement since it appears as if the sole source of income for @DDT1345's business is interest and it appears as if @DDT1345 is in the business of lending money to others.
As a result, the income from interest on the loans would be income from self-employment (earned income). In fact, the instructions for Schedule C indicate that interest from notes and accounts receivable are to be included on Line 6 (and it would have to be presumed that @DDT1345 holds some form of note when lending money).
See https://www.irs.gov/instructions/i1040sc#idm140094051206144
As a footnote, I believe the business structure (i.e., whether a sole proprietorship or S corporation) in no way dictates the size of the actual business.
