Which of the following incomes is solely assessed under Schedule E?

• A. A Rental income
• B. B Employment salary
• C. C Capital gains
• D. D Dividend income

Answer: (B)

The income that is solely assessed under Schedule E relates to the types of income received from certain activities, such as rental income and royalties. However, employment salary is categorized under different schedules.

Schedule E is specifically used for reporting income derived from passive activities, which encompasses rental income, partnerships, S corporations, estates, trusts, and royalties. This means that while rental income is reported on Schedule E, employment salary is reported under Schedule S.

The inclusion of employment salary in Schedule E is not correct because it contradicts the fundamental purpose of this schedule, which focuses on passive income rather than active income from employment. Thus, rental income remains the appropriate answer that aligns with the classification of income specifically reported on Schedule E.