Passive Activity Loss Limitation Checker

Determine if PAL limitations apply to your rental or business activity under IRC Section 469.

Activity Analysis

What type of activity is this?
Passive activities are generally rental real estate or business activities where you don't materially participate.
Do you materially participate in the activity?
Material participation means significant, regular involvement in managing the activity. See the "7 Tests" below.
Is this a rental activity?
Rental activities are generally passive regardless of material participation, with limited exceptions.
Do you have material participation in rental real estate?
Special rules for real estate professionals or those meeting the 750-hour test.

Material Participation Tests (IRC §469)

You materially participate if you meet ANY of these 7 tests:
  • You work 500+ hours in the activity during the tax year
  • You do substantially all the work (100+ hours, and no one works more)
  • You work 100+ hours and no one works more
  • Your activity is rental real estate and you actively participate (25%+ ownership, involved in management)
  • Prior 5 years you materially participated AND you're testing current year participation
  • You're a real estate professional (750+ hours in real estate activities)
  • You have a significant participation (100+ hours) in multiple activities and combined they're significant

Authority: IRC §469(c)(7), Treas. Reg. §1.469-5T

PAL Determination

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