Jed spends 32 hours a week,50 weeks a year,operating a bicycle rental store that he owns at a resort community.He also owns a music store in another city that is operated by a full-time employee.He elects not to group them together as a single activity under the "appropriate economic unit" standard.Jed spends 40 hours per year working at the music store.

Question

Quizplus · Accepted Answer

The bicycle rental store is not treated as a rental activity because the average period of customer use is 7 days or less.Jed participates for more than 500 hours during the year;therefore,the bicycle rental store is treated as an active business.However,because Jed does not materially participate in the operations of the music store,it is a passive activity.

Jed Spends 32 Hours a Week,50 Weeks a Year,operating a Bicycle