Which Taxpayer Would Not Be Considered a Material Participant of an Activity

question 20

Multiple Choice

Which taxpayer would not be considered a material participant of an activity?

• A) taxpayer materially participated in the activity for any five of the preceding ten years
• B) taxpayer participated on a regular, continuous, and substantial basis last year
• C) taxpayer participated 95 hours last year and participation is not less than any other participants for the year
• D) taxpayer participated in the activity for 995 hours last year
• E) None of these

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Definitions:

Current Liabilities

Obligations that will come due within one year or within the operating cycle, whichever is longer.

Common-Size Income Statement

A common-size income statement presents all line items as a percentage of revenue, allowing for easier comparison across companies and time periods by standardizing financial statements.

Net Sales

The revenue from sales after deducting returns, allowances for damaged or missing goods, and discounts.

Round

In mathematics or financial contexts, to round means adjusting a number to a specified degree of precision, often to the nearest whole number or decimal place.