Tom participates for 100 hours in Activity A and 450 hours in Activity B, both of which are nonrental businesses. Both activities are active.
Answer the following statement true (T) or false (F)
False
Rationale: Activity A is not a significant participation activity because Tom has not devoted more than 100 hours to it. Therefore, Activity A is not counted in applying the more-than-500-hour test and it is treated as passive. Activity B is a significant participation activity; however, the total hours are not greater than 500 hours and it is considered passive.
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