David Burton has published an article in the Daily Tax Report that analyzes a recent Tax Court involving the "material participation" exception to the "passive activity loss" rules. The passive activity loss rules are critical when an individual seeks to shelter income from her salary or investment portfolio with tax credits or depreciation.
The passive activity loss rules generally prohibit individuals from using tax credits and losses from "passive" investments to shelter salary or investment portfolio income. There is an exception if the taxpayer "materially participates" in the business that generates the tax credits and losses. The two most common ways to be deemed to materially participate are either (I) spend more than 100 hours per year working in the business with no other individual working more hours in the business than you or (II) spend 500 or more hours per year working In the business. The Tax Court case provides guidance on how to count an individual's hours for purposes of this exception.
Here is a link to the article.