Table of Contents
Exhibit 4.3:
Material
Participation
Activity (SPA)
Reg. 1.469-5T(a)(4)
Is the activity a SPA? Losses are nonpassive if the sum of hours in all SPAs is more than 500 hours for the year.
Decision Tree
Activity cannot be a SPA if it is:
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A rental or leasing activity
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An investment activity or a trader in stocks and bonds
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Any business in which the taxpayer materially participated. TP materially participated if he did more than 500 hours work; did most of the work; materially participated any 5 of the last 10 years: or met one of the other tests in Reg. 1.469-5T(a).
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An activity in which the taxpayer worked less than 100 hours during the year.
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A limited partnership interest
Go to the next step. Do not include any of the above activities in the following step.
Activity is a SPA, and losses are nonpassive if:
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The taxpayer worked 100-500 hours during the year in the activity.
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Hours in all SPAs are more than 500 in total.
