To pass the IRS's 100-hour material participation test, you must log more than 100 hours and more hours than anyone else on the activity, including contractors. If an electrician works 103 hours and you log 102, you fail. Keep contemporaneous records for yourself and all workers.
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So this week we are going to talk a little bit about material, material participation. And I, we've talked about this in prior videos, that there are 7 tests that the IRS gives you to substantiate whether or not you are materially participating in or think in something like a rental activity. We're going to talk about one in particular today, and that is the more than 100 hours and more than anybody else test. Okay. And what does this mean? So In any of these things that are hour-related, we're always really pushing the idea that you track your hours. You keep, you keep a log contemporaneously of what you're actually doing, the hours that you're doing it, et cetera. Right. And with this test, you not only have to track your hours, but you have to track everybody else's hours that are involved in this activity. Because if you have an electrician going to work on the house, or you have a landscaper going to work on the house, or you have somebody doing work on the house, Their hours, you have to make sure that your more than 100 hours is more than their hours. So you have to track their hours, their hours too, because just suppose you have this massive job that you have, you need electrical work done, and the electrician puts in 103 hours and you only have 102. Well, now they have more than 100 and more than anybody else, and that more than anybody else includes you because you only have 102. So you have to make sure that you're Maintaining more than 100 hours and more than anybody else. And the only way you know that is by tracking your hours and everybody else's. Hope that helps. If any questions, talk soon.
