Active participation in this case differs from material participation.
The IRS Publication at the link below sets forth the relevant tests.
Also note this requirement:
more than one-half of the personal services performed in trades or businesses by the taxpayer during such taxable year are performed in real property trades or businesses in which the taxpayer materially participates,
750 hours are less than one-half of the 750+1500 hours you cited.
@SweetieJean is absolutely correct. The following statement you posted indicates you would fail to qualify as a real estate professional.
I also run an engineering services company that I spend more time with - 1500 hrs last year.
Awesome everyone - thanks so much for the help! I'll go with passive income. One last question: I have a quite sizable passive loss. Likely won't be offset by income next year. Will it carry forward indefinitely?
Will it carry forward indefinitely?
Yes, and suspended passive losses will be released when you transfer your interest to a third party in a taxable transaction.
NO ... you must divide it into 2 K-1 entries ... the easiest way is to enter everything EXCEPT box 2 on the first entry and ONLY box 2 on the second entry and the program will marry them back together automatically.
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