at-risk rule

(redirected from At Risk Rules)

At-Risk Rule

In tax law, a rule disallowing investors from deducting more investment money from their taxable income than they have actually invested. For example, if one places $10,000 in a stock and would otherwise derive $15,000 in tax deductions from the investment, the at-risk rule only allows the investor to deduct $10,000. The rule exists to prevent a person from investing in a way that avoids taxes excessively.

at-risk rule

A law that limits tax write-offs to the amount of money directly invested (and thus, at risk) in an asset. The purpose of an at-risk rule is to prohibit investors from deriving tax benefits that exceed the amount of money actually invested.
References in periodicals archive ?
At issue are the new Species at Risk rules, designed to protect 28 species in Northern Ontario, which will be woven into the fabric of the Endangered Species Act (ESA).
3) Apparently, if a publicly traded partnership is taxed as a corporation (see Q 7782), the partnership is not subject to the at risk rules unless it is closely-held (generally, more than 50% control by five or fewer owners).
Under the at risk rule, how is an individual's "amount at risk" determined?
Losses disallowed because of the at risk rule may be carried forward indefinitely and deducted in future years to the extent that the activity produces net income for that year, or to the extent the taxpayer's amount at risk has been increased by additional contributions, etc.
Furthermore, items of deduction described in (4), that are disallowed by reason of the at risk rule must be further subdivided according to the tax year in which they were originally paid or accrued; when such deductions are eventually allowed, those deductions paid or accrued earliest will be allowed first.
Furthermore, should one of the taxpayer's limited partnerships be engaged in more than one activity covered by the at risk rule (e.
The at risk rule and the limitations it imposes on the deduction of losses does not affect the tax basis of property involved in the covered activity (including the tax basis of a limited interest in a partnership engaged in the covered activity) for purposes of determining gain or loss on disposition, calculating depreciation or depletion, or any other purpose.
A passive loss that would not be allowed because of the basis limitations or the at risk rule is suspended and carried forward under the basis and/or at risk provisions, not the passive loss rule.
5) Apparently, if a publicly traded partnership is taxed as a corporation (see Q 1189), the partnership is not subject to the at risk rules unless it is closely-held (generally, more than 50% control by five or fewer owners).