There is a question on Schedule C as to whether the individual filing the schedule materially participated. If not, losses would be limited.
The qualified entity rule, for some reason, does not mention material participation.
See https://www.irs.gov/pub/irs-drop/rp-02-69.pdf
However, the qualified joint venture rules do require material participation in order to make the election.
See https://www.irs.gov/businesses/small-businesses-self-employed/election-for-married-couples-unincorpo...
