Question

In order for a taxpayer to be able to deduct the loss on a business activity in which she is an owner, she must demonstrate that she in the conduct of the business. If she does NOT, the activity is considered to be a passive activity.
a) true
b) false

Answer 1

Answer: The correct answer is "a) true".

Explanation: In order for a taxpayer to deduct the loss of a commercial activity of which he is the owner, she must prove that she is materially involved in the conduct and direction of the business, since if she does not prove it, it is considered a passive activity from which she cannot deduct the loss.