Which of the following independent activities are considered passive for the year? Explain
your answer in detail.
a Laura owns a rental unit that she rents out to students. The rental unit is Lauras only
business and she spends approximately hours per year managing, collecting the rent,
advertising, and performing minor repairs. At times she must hire professionals such as
plumbers to do the maintenance. Is the rental unit a passive activity with respect to
Laura?
b Kami is a medical doctor who works four days a week in a medical practice that she and
five other doctors formed. Last year she and her partners formed another partnership that
owns and operates a medical lab. The lab employs ten technicians and a manager.
During the year Kami spent hours in meetings, reviewing records, etc., for the lab. Is
the lab a passive activity with respect to Kami? Please explain your answer.
