Frank Aragona Trust v. Comr., 142 T.C. No. 9 (2014)
The U.S. Tax Court has ruled that trusts can qualify for the real estate professional exception to the rule that rental activities are per se passive. In addition, the court held that the activities of trustees that were employees of a wholly-owned subsidiary of the trust, acting in their capacity of employees, count toward the material participation test. Also, the court implied that the activities of employees of the trust also count for purposes of determining whether sufficient material participation was present. The case represents a complete rejection of the IRS position that trust aren't "individuals" for passive loss purposes and the notion that only the trustee acting in the capacity of trustee can satisfy the test.
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