loss, (B) any dividend, income equivalent to a dividend, or payment in lieu of dividends described in section 954(c)(1)(G), (C) any interest income other than interest income which is properly allocable to a trade or business, (D) any item of gain or loss described in subparagraph (C) or (D) of section 954(c)(1) (applied by substituting business activity for controlled foreign corporation ), (E) any item of income, gain, deduction, or loss taken into account under section 954(c)(1)(F) (determined without regard to clause (ii) thereof and other than items attributable to notional principal contracts entered into in transactions qualifying under section 1221(a)(7)), (F) any amount received from an annuity which is not received in connection with the trade or business of the business activity, and (G) any item of deduction or loss properly allocable to an amount described in any of the preceding subparagraphs. (4) Application of restrictions applicable to determining taxable income Net business income or loss shall be appropriately adjusted so as only to take into account any amount of income, gain, deduction, or loss to the extent such amount affects the determination of taxable income for the taxable year. (5) Carryover business loss For purposes of subsection (b)(2)(C), the carryover business loss determined for any taxable year is the excess (if any) of the sum described in subsection (b)(2) over the sum described in subsection (b)(1) for such taxable year. (d) Passive and active business activity For purposes of this section— (1) Passive business activity The term passive business activity means any passive activity as defined in section 469(c) determined without regard to paragraphs (3) and (6)(B) thereof. (2) Active business activity The term active business activity means any business activity which is not a passive business activity. (3) Business activity The term business activity means any activity (within the meaning of section 469) which involves the conduct of any trade or business. (e) Capital