A passive activity includes any rental activity or any trade or business in which the taxpayer does not materially participate.

Question

Quizplus · Accepted Answer

A passive activity is defined as any rental activity or any trade or business in which the taxpayer does not materially participate. This means that they are not actively involved in managing the activity on a regular, continuous, and substantial basis, and are generally not eligible to deduct losses from these activities against other forms of income.

A Passive Activity Includes Any Rental Activity or Any Trade