- 20 -
An individual may be treated as materially participating in
an activity if his or her participation in that activity during
the taxable year constitutes substantially all of the
participation10 in the activity for that year. Sec. 1.469-
5T(a)(2), Temporary Income Tax Regs., supra. Because petitioner
exclusively engaged in and managed the leasing activity, he meets
this safe harbor test and thus satisfies the material
participation standard. We therefore find that petitioner has
satisfied his burden of showing that he materially participated
in the activity and was involved in the leasing activity on a
regular, continuous, and substantial basis. See sec. 469(c)(1),
(h)(1); sec. 1.469-5T(a)(2), (7), Temporary Income Tax Regs.,
supra.
III. Conclusion
Because we have found that respondent failed to meet his
burden to show petitioner did not engage in the equipment leasing
activity for profit, petitioner’s losses are not limited by
section 183. We have also found that petitioner’s equipment
leasing activity was a nonrental activity in which petitioner
materially participated. Petitioner’s losses, therefore, are not
limited by the passive activity rules of section 469, and
10“Participation” generally means any work done in an
activity by an individual who owns an interest in the activity.
Sec. 1.469-5(f)(1), Income Tax Regs.
Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 NextLast modified: May 25, 2011