I was listening to a podcast where a tax strategist discussed using the Equipment Leasing strategy for accredited investors. The investor forms an LLC. The investor contributes $50,000 and borrows $450,000 and signs an agreement with an equipment leasing company to purchase $500,000 of equipment which then gets leased out to construction companies. The LLC takes a deduction for $500,000 and deducts this loss against their other income. The equipment gets sold after a number of years which causes depreciation recapture, but you just do the same strategy over again at that point in time to counter balance the recapture. What was not explained was how this gets moved from a passive investment to material participation. It’s not like the investor is going to stand behind a counter renting equipment out for 100 hours per year. Thoughts?