Question

Bartlet owns a manufacturing business and participates in the business. Which of the following conditions would cause the business to be considered a nonpassive activity for Bartlet?
A. Bartlet participates in the business for more than 500 hours during a year.
B. The business made a profit in any three of the last five years that preceded the current year.
C. The business has at least 10 employees who, individually or collectively, work for the business more than 1,000 hours in a year.
D. Bartlet files an election with the IRS postponing nonpassive activity classification.

Answer 1

Answer:

The correct answer is (A)

Explanation:

Barlet has a manufacturing business and performs various operations throughout the year. According to the act of 1.469-5, a business must have some certain fixed operation to come under certain business activities.  The determination is usually made on a yearly basis. According to the regulation Barlet must participate in the business activities for more than 500 hours during a year.