It refers to the number of hours as an independent contractor. If you are trying to figure out if her materially participates, he does. He does all the work himself, to earn the money.
Types of Material Participation Tests
For any tax year, a taxpayer, or their spouse, qualifies as materially participating in a venture if they satisfy any one of the seven material participation tests.
- Test one: Participation for more than 500 hours.
- Test two: Activity that constituted all participation substantially.
- Test three: Involvement for more than 100 hours and no less than the participation of any other individual.
- Test four: Which is a significant participation activity, combined with all significant participation activities, for more than 500 hours. A significant participation activity is a business in which the taxpayer participates, without qualifying for any of the other six tests, for more than 100 hours.
- Test five: Participation during any five of the preceding ten taxable years.
- Test six: Which is a personal service activity for any three prior taxable years. Personal service activities are activities in which capital is not a material income-producing factor, such as health, law, engineering, architecture, accounting, actuarial science, performing arts, or consulting.
- Test seven: Partaking for more than 100 hours and based on all the facts and circumstances, on a regular, continuous, and substantial basis.
Material Participation
@rockbaby929
