material participation question for real estate agent in first year of business

Forum|Forum|3 years ago
March 9, 2023
1 reply
16 views

My client started working as real estate agent in 2022. he does not have any income from that activity but did spend about 2k in expenses towards studies, license and fees.

I clicked yes to qualified business under Section 199A.

Do I say yes/no to material participation question on Schedule C?

Thank you in advance for your help.

ProSeries Professional

This topic has been closed for replies.

Best answer by sjrcpa

It only counts starting when he became licensed.

It's not a business before then, and the costs to qualify to become licensed are not deductible.

T

TaxGuyBill

Level 15

Does your client meet one of the Material Participation tests?

https://www.irs.gov/publications/p925#en_US_2022_publink1000104582

T

taxproraginiAuthor

Level 2

Initially he said not much, but now he says it was 1500 hours, so that answers my question.

Thank you for your response.

sjrcpaAnswer

Level 15

It only counts starting when he became licensed.

It's not a business before then, and the costs to qualify to become licensed are not deductible.

The more I know the more I don’t know.

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