(a)-(e) [Reserved]
(f) Participation—(1) In general. Except as otherwise provided in this paragraph (f), any work done by an individual (without regard to the capacity in which the individual does the work) in connection with an activity in which the individual owns an interest at the time the work is done shall be treated for purposes of this section as participation of the individual in the activity.
(f)(2)-(h)(2) [Reserved]
(h)(3) Coordination with rules governing the treatment of passthrough entities. If a taxpayer takes into account for a taxable year of the taxpayer any item of gross income or deduction from a partnership or S corporation that is characterized as an item of gross income or deduction from an activity in which the taxpayer materially participated under § 1.469-2T(e)(1), the taxpayer is treated as materially participating in the activity for the taxable year for purposes of applying § 1.469-5T(a)(5) and (6) to any succeeding taxable year of the taxpayer.
(i) [Reserved]
(j) Material participation for preceding taxable years—(1) In general. For purposes of § 1.469-5T(a)(5) and (6), a taxpayer has materially participated in an activity for a preceding taxable year if the activity includes significant section 469 activities that are substantially the same as significant section 469 activities that were included in an activity in which the taxpayer materially participated (determined without regard to § 1.469-5T(a)(5)) for the preceding taxable year.
(2) Material participation for taxable years beginning before January 1, 1987. In any case in which it is necessary to determine whether an individual materially participated in any activity for a taxable year beginning before January 1, 1987 (other than a taxable year of a partnership, S corporation, estate, or trust ending after December 31, 1986), the determination shall be made without regard to paragraphs (a)(2) through (7) of this section.
(k) Examples. Example 1—Example 4 [Reserved]
Example 5.In 1993, D, an individual, acquires stock in an S corporation engaged in a trade or business activity (within the meaning of § 1.469-1(e)(2)). For every taxable year from 1993 through 1997, D is treated as materially participating (without regard to § 1.469-5T(a)(5)) in the activity. D retires from the activity at the beginning of 1998, and would not be treated as materially participating in the activity for 1998 and subsequent taxable years if material participation of those years were determined without regard to § 1.469-5T(a)(5). Under § 1.469-5T(a)(5) of this section, however, D is treated as materially participating in the activity for taxable years 1998 through 2003 because D materially participated in the activity (determined without regard to § 1.469-5T(a)(5) for five taxable years during the ten taxable years that immediately precede each of those years. D is not treated under § 1.469-5T(a)(5) as materially participating in the activity for taxable years beginning after 2003 because for those years D has not materially participated in the activity (determined without regard to § 1.469-5T(a)(5) for five of the last ten immediately preceding taxable years.[T.D. 8417, 57 FR 20758, May 15, 1992]
Notes of Decisions
Cited in
20
cases, 1996–2017 · leading case:
Tolin v. Comm'r, 2014 T.C. Memo. 65 (Tax Ct. 2014).
Tolin v. Comm'r, 2014 T.C. Memo. 65 (Tax Ct. 2014).
· cites it 6× “469-5(f)(1), Income Tax Regs. However, work done by the individual in his capacity as an investor in the activity, such as studying and reviewing financial statements, is not treated as participation unless the individual is involved in the day-to-day management or operations of…”
Lum v. Comm'r, 2012 T.C. Memo. 103 (Tax Ct. 2012).
· cites it 2× “Participation generally means all work done in connection with an activity by an individual who owns an interest in the activity.”
Miller v. Comm'r, 2011 T.C. Memo. 219 (Tax Ct. 2011).
· cites it 2× “"Participation" generally means any work done in an activity by an individual who owns an interest in the activity.”
Hailstock v. Comm'r, 2016 T.C. Memo. 146 (Tax Ct. 2016).
· cites it 2× “r not consecutive) during the ten taxable years that immediately precede the taxable year; (6) The activity is a personal service activity * * *, and the individual materially participated in the activity for any three taxable years (whether or not consecutive) preceding the…”
Lamas v. Comm'r, 2015 T.C. Memo. 59 (Tax Ct. 2015).
· cites it 2× “469-5(f), Income Tax Regs. ↩ 28. Sec. 1.469-5T(f)(2), Temporary Income Tax Regs.”
Ackerman v. Comm'r, 2009 T.C. Memo. 80 (Tax Ct. 2009).
· cites it 2× “With respect to the term "participation", final regulations issued under section 469 provide that generally any work done by an individual (without regard to the capacity in which the individual does the work) in connection with an activity in which the individual owns an…”
Trzeciak v. Comm'r, 2012 T.C. Memo. 83 (Tax Ct. 2012).
· cites it 2× “As such, travel time claimed by the taxpayer should not be considered in the hourly tests under IRC 469(c)(7) , and Reg.”
Fitch v. Comm'r, 2012 T.C. Memo. 358 (Tax Ct. 2012).
· cites it 2× “le years that immediately precede the taxable year; (6) The activity is a personal service activity * * *, and the individual materially participated in the activity for any three tax years (whether or not consecutive) preceding the taxable year; or (7) Based on all of the facts…”
Penley v. Comm'r, 2017 T.C. Memo. 65 (Tax Ct. 2017).
· cites it 4× “469-5(f)(1), Income Tax Regs. We note that even though petitioners did not own the Sterne property, Mr.”
Scheiner v. Comm'r, 1996 T.C. Memo. 554 (Tax Ct. 1996).
· cites it 2× “th respect to the term "participation", final regulations issued under section 469 provide that generally "any work done by an individual (without regard to the capacity in which the individual does the work) in connection with an activity in which the individual owns an…”
Mordkin v. Comm'r, 1996 T.C. Memo. 187 (Tax Ct. 1996).
· cites it 8× “With respect to the term "participation", final regulations issued under section 469 provide that generally "any work done by an individual (without regard to the capacity in which the individual does the work) in connection with an activity in which the individual owns an…”
Coastal Heart Med. Grp., Inc. v. Comm'r, 2015 T.C. Memo. 84 (Tax Ct. 2015).
· cites it 2× “le years (whether or not consecutive) during the ten taxable years that immediately precede the taxable year; (6) The activity is a personal service activity * * *, and the individual materially participated in the activity for any three taxable years (whether or not…”
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