In short
The at-risk rules limit a taxpayer's deductible losses from an activity to the amount the taxpayer could actually lose: generally cash and property contributed plus debt for which the taxpayer is personally liable.
Key takeaways
- They are applied after the basis limit and before the passive activity rules.
- Nonrecourse debt generally isn't at risk, except qualified nonrecourse financing for real estate.
- Losses disallowed by them carry forward until the taxpayer has more amount at risk.
Where it's tested
REG: Individual Taxation: Gross Income — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Which of the following items is included in a taxpayer's federal gross income?