What is Passive Income?

Legal Definition
Passive income is an income received on a regular basis, with little effort required to maintain it.

The American Internal Revenue Service categorizes income into three broad types, active income, passive income, and portfolio income. It defines passive income as only coming from two sources: rental activity or "trade or business activities in which you do not materially participate." Other financial and government institutions also recognize it as an income obtained as a result of capital growth or in relation to negative gearing. Passive income is usually taxable.
-- Wikipedia
Legal Definition
Any income that is not earned due to a direct acitivity. For instance, income made through rent, a limited partnership or any other passive source. It does not include earned salary, capital gains or interest earned.