Match the term with the correct response.More than one response may be correct.
-Material participation.
A)Taxpayer devotes time aggregating more than 500 hours in all significant participation activities during the year.
B)Taxpayer participates in making management decisions in a significant and bonafide sense.
C)It is one in which the individual's participation equals more than 100 hours during the year.
D)Taxpayer devotes time in the activity, which constitutes substantially all of the participation in the activity of all individuals.
E)Both options a.and d.are correct.
F)No correct choice is given.

Question

Quizplus · Accepted Answer

Material participation can be defined in several ways, but the most common definitions are that the taxpayer either aggregates more than 500 hours in all significant participation activities during the year (option a) or that the taxpayer devotes time in the activity, which constitutes substantially all of the participation in the activity of all individuals (option d). Since both a and d are correct, the best answer is E. The other options are incorrect or incomplete. For example, option b describes another way to meet the material participation test (i.e., by participating in making management decisions in a significant and bona fide sense), but it is not the only way. Option c is too broad, as it covers all activities in which the individual's participation equals more than 100 hours, not just significant ones. Option f is also incorrect, as one or more correct choices are given.

Match the Term with the Correct Response