Educational scenario · Treas. Reg. § 1.469-5T(a)(1)

Material Participation & 7-Day Rule Hours Modeler.

Compare entered owner hours with modeled Test 1 (500 hours) and Test 3 (100 hours plus plurality) conditions; tax eligibility requires CPA review.

For each other person, combine eligible cleaning, maintenance, management, and other work across all roles. Enter only the highest individual total. Two different cleaners at 90 hours each means 90; one person with 90 cleaning plus 90 maintenance hours means 180. Spousal participation and activity grouping require professional review.

1. Annual eligible hours by individual

Owner / Spouse active hoursGuest messaging, bookkeeping, supply runs, maintenance

Highest other individual’s eligible hours, across all rolesCombine every eligible role worked by the same person, then enter the largest individual total

W-2 or active business taxable incomeContext-only amount; it does not determine this hours comparison

2. Modeled hour-condition comparison

This model compares entered owner hours with the displayed 500-hour condition; eligible participation hours require CPA review.

This model compares entered owner hours with a greater-than-100-hour and plurality condition; eligibility requires CPA review.

Owner: 135h

Top Contractor: 95h

Participation Recordkeeping Review:

Contemporaneous records may support a participation analysis. Review dates, durations, property details, task descriptions, evidentiary sufficiency, and applicable requirements with your CPA.

IRC § 469 Concepts for Professional Review

Rental-activity and passive-loss treatment depends on IRC § 469, taxpayer facts, exceptions, grouping, and applicable limitations. Review any loss treatment with your CPA.

Treasury Regulation § 1.469-1T(e)(3)(ii)(A) includes an average-customer-use condition involving 7 days or less. Classification depends on the complete facts and professional review.

Material-participation and activity-classification analyses can affect loss treatment. This model does not establish participation or determine whether any loss offsets other income.

Participation Activities and Records to Review

A participation review may examine the nature, timing, and substantiation of recorded activities:

Activities to discuss: Guest communication, cleaner management, acquiring consumables, physical turnovers, routine repairs, staging photography, pricing adjustments, and bookkeeping review. Eligibility depends on facts and applicable rules.
Activities requiring closer review: General research, property browsing, financial-statement review, and travel may receive different treatment depending on purpose, conduct, and evidence.

Related Resources:

Source-linked bookkeeping records

Prepare source-linked records for your CPA.

Roxby retains source-linked records and versioned Close Receipts for accountant review.