A passive activity
I.includes any trade or business in which a taxpayer does not materially participate.
II.includes rentals of apartment buildings, rental houses, etc., where no significant personal services are involved.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question

A passive activity
I.includes any trade or business in which a taxpayer does not materially participate.
II.includes rentals of apartment buildings, rental houses, etc., where no significant personal services are involved.
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A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Quizplus · Accepted Answer

Both statements are correct. Passive activities include any trade or business in which a taxpayer does not materially participate, as well as rental activities where no significant personal services are involved. Examples of rental activities that are typically considered passive include renting out apartments or houses, but not providing things like maid service or meals to tenants.

A Passive Activity I.includes Any Trade or Business in Which a Taxpayer Does