The spouse (Spouse B) of the shareholder of a corporation with a construction and property management business works 25 hours in the property management business, but not in the construction business. Must the flow of funds be traced from the property management business to Spouse B to ensure they are “excluded amounts”? After noting that the property management, but not the construction, business thus would be an excluded business of Spouse B,
[A]ny income of Spouse B that is derived directly or indirectly from the property management business will be income from an excluded business of the spouse and will not be split income subject to TOSI. Any income of the spouse that is derived directly or indirectly from the construction business will not be income from an excluded business of the spouse and will be split income subject to TOSI unless another exclusion applies. This will require separate accounting for each business and a tracing of funds.