Lucero v. Commissioner: travel time is not participation

By Max Medvedev · 6 Aug 2026

The hours that felt like work and counted as nothing

An owner of a distant, manager-run short-term rental claimed material participation and lost. Travel time to the property did not count toward the hour tests, and what remained could not beat the manager's participation. A personal-use question under IRC §280A was raised but did not decide it. The loss stayed passive.

Lucero v. Commissioner, T.C. Memo 2020-136, is the case for anyone whose property is several hours away and whose year is full of trips to it.

What happened

Three facts stack in this case, and each one weakens the claim.

The property was distant. It was run by a manager, which puts another individual's hours on the board. And a meaningful part of the claimed participation was travel — the hours it takes to get to a property you do not live near.

The section 280A personal-use question also surfaced. It was not what decided the outcome, but its presence is part of the shape: a remote property that the owner visits is a property where personal use is a live question at the same time as participation is.

What the court held

Material participation was not established, so the loss remained passive and could not offset non-passive income. Travel time did not carry the claim.

That holding matches how examiners are trained to read a log. The IRS passive-activity audit guide applies the statutory standard — participation must be regular, continuous, and substantial — excludes investor-capacity hours, and states that travel time "generally should not be considered." The same guide tells examiners to establish the taxpayer's location and distance from the property, and to establish hours spent on every other obligation in the opening interview. Distance and a day job are not disqualifying facts. They are the facts used to test whether the claimed hours were possible.

Travel is not uniformly hopeless. In Leyh v. Commissioner, T.C. Summ. Op. 2015-27, a clean real-time log earned the taxpayer the benefit of the doubt on travel hours that had been left out. The pattern across both cases is consistent: the quality of the rest of the record decides how a court treats the fragile hours.

The tell

The deciding behaviour was counting the commute as the work.

Travel feels like participation because it is unavoidable, costly and spent entirely on the rental. None of that is the test. Participation is work performed in the activity, and a car on a highway is not performing it. The moment travel hours are inside the total, two things follow at once: the total inflates in the category an examiner is trained to strike first, and the countable hours underneath become impossible to see without an audit of your own log.

Distance makes it worse in a specific way. The further away the property, the larger travel looms in the year and the smaller the share of hours that are actually operational — and the more of the operating work has to be delegated to someone local. That is the second half of the trap. The manager who makes a remote property workable is the same individual whose hours you have to exceed under Reg. §1.469-5T(a)(3). Distance and delegation move together, and they move against you.

The result is a log that looks full and tests thin: heavy on trips, light on the guest messages, scheduling, pricing and vendor coordination that count and that a remote owner can genuinely do.

What this means for your records

Three rules fall out, and they are the same rules whether the property is thirty minutes away or six hours.

Fragile hours are recorded separately, never blended. Travel is logged in its own category, outside the participation total, with the work it attached to recorded on its own terms — three hours of driving and two hours of repairs are two entries, not five hours of "property visit." A total that survives having travel removed is a total that never depended on it.

Remote operating work is where the hours actually are. Guest communication, booking and pricing changes, scheduling and checking vendors, restocking orders, review responses and running the money are all done from anywhere, and all count. Each of them also leaves a timestamped trace — a message thread, a platform change, an invoice, a bank line — which is what turns a claimed hour into a shown one.

The manager's hours belong in the same file. The comparison in the 100-hour test runs against the single highest other individual, so a manager-run property needs the manager's statements and invoices captured monthly, alongside owner and spouse hours under IRC §469(h)(5). Pohoski v. Commissioner, T.C. Memo 1998-17, is the case where that record existed for one property and not the other, with opposite results.

And the §280A line stays independent of all of it. Personal use above the greater of 14 days or 10% of the days rented at fair value makes the property a residence under IRC §280A(d)(1), and §280A(c)(5) caps deductions at rental income — a limit no hours log can repair. On a property rented 180 days, that ceiling is 18 personal nights, and family stays count even at full price.

The hub for this cluster, how to prove your short-term rental hours, sets out the seven tests and the evidence each one wants.

See which hours survive

Run your log through the estimator — it strips the categories that never count, including travel that is not integral to the work, and scores what remains against the highest-hour vendor with the rule cited for each exclusion.