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Generally, passive activities include:

  1. Activities that involve the conduct of a trade or business if the partner does not materially participate in the activity and; 
  2. All rental activities regardless of the partner’s participation.

Activities that are not passive:

  1. Trade or business activities in which the partner materially participated for the tax year.
  2. Any rental real estate activity in which the partner materially participated if the partner met both of the following conditions for the tax year:
    • More than half of the personal services the partner performed in trades or businesses were performed in real property trades or businesses in which he or she materially participated and; 
    • The partner performed more than 750 hours of services in real property trades or businesses in which he or she materially participated.

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