Rene owns four small businesses.Rene spends the following number of hours this year working in those businesses: Business A,105 hours; Business B,130 hours; Business C,120 hours; Business D,99 hours.Which of the following statements is correct?
A)Businesses A,B,C,and D are all significant participation activities.
B)Businesses A,B,and C are material participation activities.
C)Businesses A,B,and C are significant participation activities.
D)Both businesses A,B,and C are material participation activities and businesses A,B,and C are significant participation activities are correct.

Question

Quizplus · Accepted Answer

According to the IRS, a significant participation activity requires participation in the activity for at least 100 hours during the year. Rene has spent 105, 130, and 120 hours in businesses A, B, and C respectively, therefore they are significant participation activities. Business D requires less than 100 hours, so it is not a significant participation activity. However, there is no information provided in the question about whether the businesses are material participation activities or not. Therefore, option D is incorrect.

Rene Owns Four Small Businesses