Source of dubious income turned out to be fiendish (7)
I believe the answer is:
demonic
'fiendish' is the definition.
('demonic' can be a synonym of 'fiendish')
'source of dubious income turned out' is the wordplay.
'source of' indicates taking the first letters.
'turned out' indicates anagramming the letters.
The first letter of 'dubious' is 'd'.
'income' anagrammed gives 'emonic'.
'd'+'emonic'='DEMONIC'
'to be' acts as a link.
(Other definitions for demonic that I've seen before include "Cruel like the devil" , "Devilish" , "Like a devil or evil spirit" , "Like evil spirits" , "Fiendish or satanic" .)