- 17 - any trade or business and in which the taxpayer does not materially participate. Sec. 469(c)(1). For purposes of section 469(c)(1), the term “trade or business” is defined in section 469(c)(6) to include any activity in connection with a trade or business or any activity with respect to which expenses are allowable as a deduction under section 212. Section 469(h)(1) provides that generally an individual is to be treated as materially participating in an activity only if such individual is involved in the operations of the activity on a basis that is regular, continuous, and substantial. Congress expressly authorized the Secretary of the Treasury to prescribe such regulations as may be necessary or appropriate to carry out the provisions of section 469, including regulations that specify “what constitutes * * * material participation”. Sec. 469(l)(1). Both temporary and final regulations relating to the meaning of the terms “participation” and “material participation” have been promulgated under section 469. With respect to the term “participation”, final regulations issued under section 469 provide that generally any work done by an individual (without regard to the capacity in which the individual does the work) in connection with an activity in which the individual owns an interest at the time the work is done shall be treated for purposes of this section as participation of the individual in the activity. [Sec. 1.469- 5(f)(1), Income Tax Regs.] Temporary regulations issued under section 469 provide certainPage: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Next
Last modified: May 25, 2011