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Generally, passive activities include:

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

Activities that are not passive:

  • Trade or business activities in which the partner materially participated for the tax year.
  • 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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