A classification of tax payer, who when selling a capital asset, is determined to be holding the timber for economic gain but is not materially participating in its management.
a business or trade in which you do not materially participate, such as rental activity
an investment in -- specifically -- real estate (as opposed to all those other active investments like preferred stock)
a Schedule C or F activity with no material participation, a limited partner interest without more stringent material participation, and a rental (regardless of the level of participation)
A business or rental activity that the taxpayer does not materially participate in managing or running. See also, Passive Loss Allowance.
A passive activity is one defined in the US tax code as one or more trade, business or rental activity that the taxpayer does not materially participate in managing or running. All income and losses from passive activities are grouped together on an income tax return and generally, loss deductions are limited or suspended until the passive activity that generated them is disposed of in its entirety.
An activity involving the conduct of any trade or business in which the taxpayer does not "materially participate" on a regular, continuous, and substantial basis, as defined in the IRC. Generally, real estate activities are considered passive except for residential real estate where the taxpayer "actively participates", as defined in the IRC. Net losses from passive activities may not be offset against a taxpayer's other income, such as salary or portfolio income.
An activity in which a person does not materially participate such as real estate rentals and limited partnerships.
Generally, passive activities include trade or business activities in which you did not materially participate for the tax year, as well as rental activities (regardless of your participation). Losses from passive activities may be limited.
An activity involving the conduct of a trade or business in which you do not materially participate and any rental activity. However, the rental of real estate is not a passive activity if both of the following are true. More than one-half of the personal services you perform during the year in all trades or businesses are performed in real property trades or businesses in which you materially participate. You perform more than 750 hours of services during the year in real property trades or businesses in which you materially participate.
An activity in which you do not materially participate. Real estate rentals and limited partnerships are examples of passive activities.
The income tax treatment for passive activity income and losses is very specific. The IRS states the following; "Generally, you are in a passive activity if 1) you have a trade or business activity in which you do not materially participate during the tax year, or 2) you have a rental activity, even if you do materially participate in it (unless you are a real estate professional)." We will gladly assist you with tax planning concerning your investment activities.
A business deal in which an individual does not contribute to the actual management of the venture (silent partner.) These losses are subject to deduction limitations.