Chapter 12 T/F

Question 1

Generally, excess losses from a passive activity may not be used to offset nonpassive income for income tax purposes.

Answer 1

True

Question 2

Under the passive activity loss rules, material participation means involvement in the actual operations of the activity on a regular, continuous, and substantial basis.

Answer 2

True

Question 3

To qualify for the active participation exception to the passive activity loss rules, the taxpayer must own at least 20 percent of the rental real estate, measured by value.

Answer 3

False. The taxpayer must own at least 10 percent of the rental real estate, measured by value