What Is the Meaning of Material Participation?

Abstract

[...]E pays E's spouse to work as an office receptionist in connection with the activity for an average of 15 hours per week during the taxable year. [...]E is not treated as participating in the activity for the taxable year.3 In a turnabout, the taxpayer in Carlstedŕ argued he did not materially participate under Reg. §1.469-5T(a)(1) in CDI (a general contracting business). [...]Maureen materially participates in the cosmetic business and it is therefore not a passive activity. [...]the losses incurred were subject to the passive loss rules of Code Sec. 469.