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.