Roy Ritter died two years ago. Among the assets he owned were Ritter Ranch, a cattle ranch consisting of 12,220 acres in Texas. In accordance with Roy’s will, the ranch passed to a testamentary trust (the Ritter Trust) with grandson Gene Ritter as trustee. The sole asset of the trust is the ranch, and unfortunately the ranch is operating at a loss. Gene is an accountant and devotes some hours to day-to-day ranching issues but does not meet the material participation test in the context of the passive activity loss (PAL) rules. Gene employs a well-trained, full-time ranch manager and 20 “ranch hands.” Ritter Trust is a new client of your firm. Write a memo in which you discuss the applicability of the PAL rules to the Ritter Trust. In particular, you should discuss whether “material participation” is measured by just the trustee’s hours and activities or whether the hours and efforts of the trustee, the ranch manager, and all of the other employees should be considered. Recall that Sec. 469 is the primary IRC section for the PAL rules.