Generally, passive activities include:

• Activities that involve the conduct of a trade or business if the shareholder does not materially participate in the activity, and
• All rental activities regardless of the shareholder’s participation.

Activities that are not passive:

• Trade or business activities in which the shareholder materially participated for the tax year.
• Any rental real estate activity in which the shareholder materially participated if the partner met both of the following conditions for the tax year.
  • More than half of the personal services the shareholder performed in trades or businesses were performed in real property trades or businesses in which he or she materially participated, and
  • The shareholder performed more than 750 hours of services in real property trades or businesses in which he or she materially participated.