Trade or Business Activities

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:

1. Involves the conduct of a trade or business (within the meaning of section 162),

2. Is conducted in anticipation of starting a trade or business, or

3. Involves research or experimental expenditures deductible under section 174 (or that would be if the corporation chose to deduct rather than capitalize them).

Reporting Income, Deductions, Losses, and Credits From Trade or Business Activities

Trade or business activities with mate- rial participation. If the corporation materially participated in a trade or business activity, that activity is not a passive activity. Report the income, deductions, losses, and credits from the activity on the form or schedule normally used.

Trade or business activities without material participation. In general, use Worksheets 1 and 2 to determine the amount to enter in Part I of Form 8810 for

Instructions for Form 8810 (2025) 3

The corporation is not treated as a limited partner; however, if the corporation was also a general partner in the partnership at all times during the partnership's tax year ending with or within the corporation's tax year (or, if shorter, during the portion of the partnership's tax year in which the corporation directly or indirectly owned a limited partnership interest).

Consolidated groups. See Regulations section 1.469-1(h)(4) for rules for determining whether a consolidated group materially or significantly participates.