SCH E

I am assuming it means this... from IRS pub 527. Would the person qualify based off of what I said or is there a way for you to help me concretize my thoughts. Thank you 

Passive Activity Limits
In most cases, all rental real estate activities
(except those of certain real estate professionals, discussed later) are passive activities. For
this purpose, a rental activity is an activity from
which you receive income mainly for the use of
tangible property, rather than for services. For a
discussion of activities that aren’t considered
rental activities, see Rental Activities in Pub.
925.
Deductions or losses from passive activities
are limited. You generally can’t offset income,
other than passive income, with losses from
passive activities. Nor can you offset taxes on
income, other than passive income, with credits
resulting from passive activities. Any excess
loss or credit is carried forward to the next tax
year. Exceptions to the rules for figuring passive
activity limits for personal use of a dwelling unit
and for rental real estate with active participation are discussed later.
For a detailed discussion of these rules, see
Pub. 925.
Real estate professionals. If you are a real
estate professional, complete line 43 of Schedule E.
You qualify as a real estate professional for
the tax year if you meet both of the following requirements.
• More than half of the personal services you
perform in all trades or businesses during
the tax year are performed in real property
trades or businesses in which you materially participate.
• You perform more than 750 hours of services during the tax year in real property
trades or businesses in which you materially participate.
If you qualify as a real estate professional,
rental real estate activities in which you materially participated aren’t passive activities. For
purposes of determining whether you materially
participated in your rental real estate activities,
each interest in rental real estate is a separate
activity unless you elect to treat all your interests in rental real estate as one activity.
Don’t count personal services you perform
as an employee in real property trades or businesses unless you are a 5% owner of your employer. You are a 5% owner if you own (or are
considered to own) more than 5% of your employer's outstanding stock, or capital or profits
interest.
Don’t count your spouse's personal services
to determine whether you met the requirements
listed earlier to qualify as a real estate professional. However, you can count your spouse's
participation in an activity in determining if you
materially participated.