Question

.Passive loss rules do NOT apply to a limited partner who meets which of the following material participation tests?

Participation for more than 500 hours in the activity during the year.

Material participation in the activity for any five of the ten tax years immediately preceding the current year.

If the activity is a personal service activity, material participation in that activity for any of the three preceding tax years.

All of the above.

Answer 1

Ans - ALL OF THE ABOVE (Option 4)

A limited partner will be qualified to be materially participating if he satisfies any one of 7 following condition.
1- Participation for more than 500 hours in the activity during the year.
2- Material participation in the activity for any five of the ten tax years immediately preceding the current year.
3- If the activity is a personal service activity, material participation in that activity for any of the three preceding tax years.
(These are 3 already mentioned , apart from them there are 4 more)
4- Activity that constituted substantially all participation
5- No less participation than that of any other individual for more than 100 hours
6- For significant participating activity, combined with all significant participating activities for more than 500 hours
7- Partaking for more than 100 hours regularly, continuously and also substantially

If any of the above 7 tests are met, than Passive loss rules will not apply to the limited partner