That's correct regarding federal.
The murky area is with Kansas City MO taxing businesses getting rental income. I've seen examples(i'm trying to find them again for citation) of a person hiring a prop mgr to do everything and then it's passive, versus them making all the decisions, selecting tenants, approving repairs etc. they start to consider it your "employment" and thus taxable....
here is some verbiage from KCMO (seems to apply to business not individual???)
examples from the Earnings and Profits Tax Regulations
Of the City of Kansas City, Missouri
Sections §1.381 to §1.402 Inclusive
(V) The term “income producing activity” applies to each separate
item of income and means the transactions and activity directly
engaged in by the taxpayer in the ***regular course of its trade or
business for the ultimate purpose of obtaining gains or profit***. ...
Accordingly, “income producing activity”
includes, but is not limited to the following:
...
(b) The sale, rental, leasing, licensing, or other use of real property.
----- and also
Gross receipts derived from business within the city, and included in
the numerator of the gross receipts factor, shall be the amount of gross
receipts determined as follows:
(I) Rents and royalties for the use of property. Gross receipts derived
from rents, royalties or other charges for fees derived from the use
of property that are subject to this tax under the provisions of these
regulations shall be considered to be gross receipts from within
Kansas City, Missouri as follows:
(a) Gross receipts from the sale, lease, or rental of real property are
in Kansas City, Missouri if the real property is located in
Kansas City, Missouri.
