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Hi Bill, thanks for your help. I had been confused as I'm not really a tax guy and only prepare my own return.
After reading the instructions, I had been thinking that if I had net income from a Significant Participation Passive Activity, that it would need to be entered in the Worksheets A and B for SPPA's referred to in Pub 925 and end up on Form 8582 no matter what. Now I am understanding that 8582 would only come into play if there was a combined net loss from SPPA's.
I bolded the section below from Pub 925 that I didn't catch before. So now I think you are correct, I can just click the "Not a passive activity" and I should be OK.
It does still seem to me though that the software should recognize that it is an SPPA if you enter 100+ hours, and automatically recharacterize the overall income as non-passive for you (or leave it passive if it was overall loss). But there may be a reason for that which I don't understand.
At any rate, thanks again for your help. This has helped to answer my question for this return.
from Pub 925:
Recharacterization of Passive Income
Net income from the following passive activities may have to be recharacterized and excluded from passive activity income.
Significant participation passive activities,
If you’re engaged in or have an interest in one of these activities during the tax year (either directly or through a partnership or an S corporation), combine the income and losses from the activity to determine if you have a net loss or net income from that activity.
If the result is a net loss, treat the income and losses the same as any other income or losses from that type of passive activity (trade or business activity or rental activity).
If the result is net income, don’t enter any of the income or losses from the activity or property on Form 8582 or its worksheets. Instead, enter income or losses on the form and schedules you normally use. However, see Significant Participation Passive Activities , later, if the activity is a significant participation passive activity and you also have a net loss from a different significant participation passive activity.
