Test Your Knowledge of Passive Activities
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Questions and Answers

What is a passive activity?

  • An activity in which you own more than 10% of the business
  • An activity in which you are actively involved in the day-to-day management
  • An activity in which you do not materially participate (correct)
  • An activity in which you spend a lot of time and effort

    • What is an example of a passive activity?

  • Running a small business
  • Managing a partnership
  • Owning rental real estate (correct)
  • Investing in stocks

    • How can you use passive losses on your tax return?

  • To offset portfolio income
  • To offset any type of income
  • To offset active income
  • To offset passive income (correct)

    • What is the maximum number of hours per year you can spend on a passive activity and still be considered a material participant?

    <p>500 hours</p> Signup and view all the answers

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