Answer:
B. income generated from direct investments in real estate
Step-by-step explanation:
Given that passive losses can only be offset by passive income, then from the available options, REIT otherwise known as Real Estate Investment Trust, the dividend is not categorized as passive income by the Internal Revenue Service, hence, option A is wrong.
Also, dividends received from blue-chip corporations is not a passive income, hence, option C is wrong.
At the same time, option D which is capital gains generated from the sale of securities is not a passive income either.
Therefore, option B, which is income generated from direct investments in real estate is a perfect example of passive income. Hence, the right answer.