Tenants in common - who can claim active participation?

Question

A family (parent and children) owns rental properties as tenants in common. Each co-owner has more than a 10% stake in the properties. One co-owner does 99% of the property management. However, when it comes time to approving rental applications, making decisions on capital improvements, etc., all co-owners are consulted before a decision is made. Can all family members claim active participation in this passive activity?

I have read what the IRS says about Passive Activity in Publication 925, where it says:

I'm just still unsure about whether all co-owners in my example qualify.

I have read what the IRS says about Passive Activity in Publication 925, where it says:

I'm just still unsure about whether all co-owners in my example qualify.

Ashish Acharya · Answer

Based on the limited info, most likely there is active participation but talk to your tax advisor.

Eamonn McElroy · Answer

The internal revenue code is often general is nature due to necessity.  If it listed out every possible scenario it would considerably dwarf the already very large page count.

Let's see if I can help you with this....have you seen anything that specifically disallows claiming active participation based on your fact pattern?  What is required to claim active participation?  What does the IRS pub say (we'll ignore the fact that IRS pubs are not authoritative guidance for now)?