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MATERIALMAN a person who supplies materials used in the construction or repair of a building or other property. Example: Since the materialman was not paid for lumber, he filed a MECHANIC'S LIEN against the property.
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MATERIAL PARTICIPATION a tax term introduced by the 1986 tax act, defined as year-round active involvement in the operations of a business activity on a regular, continuous, and substantial basis. Three main factors to consider in determining the presence of material participation are: Is the activity the taxpayer's principal trade or business? How close is the taxpayer to the business? Does the taxpayer have knowledge and experience in the enterprise? Retired Farmers A special exception is provided for retired farmers who are considered to continue to participate materially in that activity after retirement, as does the spouse of deceased farmers. Limited Partners Limited partnership interests are considered inherently passive. However, the IRS may draft regulations to prevent persons from using the limited partnership vehicle for any business enterprise simply to generate passive income to offset passive losses.