You participated (over 100 hours) on a regular, continuous, and substantial basis throughout the year.The TOBA is a personal service activity in which you materially participated for any three (aggregate) preceding tax years.You materially participated in five (aggregate) out of the last ten years.SPA – any TOBA in which participation > 100 hours for the year and you didn't meet any of the other material participation tests, other than this one (#4). The TOBA is a significant participation activity (SPA) and you participated in all SPAs for more than 500 hours.Your participation > 100 hours and no one participated more than you.Your participation was substantially all of the participation in the TOBA.Publication 925 states that you materially participate in a trade or business activity (TOBA) if you meet any one of the following seven tests: But what exactly is “material participation”? Income from other trades or businesses in which you do not materially participateĪs mentioned above, income from trades or businesses in which you materially participate is considered active income.Sounds much better than active income, right? That’s because it is! It's more of a hands-off investment that generates income for you without much work on your part. Passive income is income derived from a source in which you are not actively involved. Income from other trades or businesses in which you materially participate.
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