Rick, a computer consultant, owns a separate business (not real estate) in which he participates. He has one employee who works part-time in the business.
A) If Rick participates for 500 hours and the employee participates for 620 hours during the year, Rick qualifies as a material participant.
B) If Rick participates for 550 hours and the employee participates for 2,000 hours during the year, Rick qualifies as a material participant.
C) If Rick participates for 120 hours and the employee participates for 120 hours during the year, Rick does not qualify as a material participant.
D) If Rick participates for 95 hours and the employee participates for 5 hours during the year, Rick probably does not qualify as a material participant.
E) None of the above.

Question

Quizplus · Accepted Answer

Rick qualifies as a material participant if he participates for more than 500 hours in the business during the year, regardless of the employee's hours.

Rick, a Computer Consultant, Owns a Separate Business (Not Real