Trade — Instruction 8582-CR — Instructions for Form

A trade or business activity is an activity (other than a rental activity or an activity treated as incidental to an activity of holding property for investment) that:

Involves the conduct of a trade or business (within the meaning of section 162),
Your participation in the activity for the tax year was substantially all of the participation in the activity of all individuals (including individuals who didn’t own any interest in the activity) for the year.
You participated in the activity for more than 100 hours during the tax year, and you participated at least as much as any other individual (including individuals who didn’t own any interest in the activity) for the year.
Is conducted in anticipation of starting a trade or business, or
Involves research or experimental expenditures, including software development, subject to either section 174 (foreign research) or section 174A (domestic research).

Reporting Credits From the Activities

Trade or business activities with material participa- tion. If you materially participated in a trade or business activity, the activity isn’t a passive activity. Report the credits from the activity on the forms you normally use.

The activity is a significant participation activity for the tax year, and you participated in all significant participation activities during the year for more than 500 hours.

A significant participation activity is any trade or business activity in which you participated for more than 100 hours during the year and in which you didn’t materially participate under any of the material participation tests (other than this fourth test).

You materially participated in the activity for any 5 (whether or not consecutive) of the 10 immediately preceding tax years.
The activity is a personal service activity in which you materially participated for any 3 (whether or not consecutive) preceding tax years.

Trade or business activities without material partici- pation. If you didn’t materially participate in a trade or business activity, the activity is a passive activity. Generally, you must use Worksheet 4, later, to figure the amount to enter on Form 8582-CR for each trade or business activity in which you didn’t materially participate. However, if you held the activity through a PTP, special rules apply. See Publicly Traded Partnerships (PTPs) , later.