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Income Tax Planning
Chapter 14: Passive Activity Rules/TEST FOR MATERIAL PARTICIPATION
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Chapter 14: Passive Activity Rules

TEST FOR MATERIAL PARTICIPATION

01.Core Concepts

1. More than 500 hours 2. More than 100 hours, but no less than anyone else 3. All substantial participation is the taxpayer’s 4. More than 100 hours at several activities and more than 500 hours in total 5. Materially participate in 5 of the last 10 years 6. Materially participate in personal service activity for at least 3 years 7. Facts and circumstances indicate regular, continuous, and substantial activity Limited Partners must meet test 1, 5, or 6.