The correct answer is option b, "All of the above." Material participation refers to the level of involvement in a nonrental trade or business activity.
To be considered as materially participating, an individual taxpayer can meet any of the following conditions:
1. Participating more than 500 hours.
2. Being the only person participating in the activity.
3. Having employees but participating more than 100 hours and no other employee working more than the individual.
If any of these conditions are met, the individual taxpayer would be considered as materially participating in the activity. Material participation is important because it determines whether the taxpayer can treat the losses from the activity as active losses that can offset active or portfolio income.
Material participation can be determined by meeting any of the conditions mentioned in the options a, c, and d.