at-risk rule

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 ?
To ice the cake, we should impose an at-risk rule, which states that an investor can't write off losses on money for which he is not personally liable, such as the non-recourse loans that multiply McGovern's deductions.
NAA/NMHC/ASHA have long urged the repeal of the overly-complicated at-risk rules arguing they are no longer needed.
In addition, the at-risk rules were extended to real estate.
465 at-risk rules are eligible for indefinite carryover (the same as losses suspended under the basis limitation rules).
Practitioners tend to focus on the first and last of these three and may overlook special provisions of the at-risk rules that can allow some taxpayers to recognize more of their losses sooner.
Reasoning by analogy to the at-risk rules of section 465, the court concluded that Peracchi was entitled to a step-up in basis to the extent of his risk of economic loss if the investment were to become unrecoverable.
One of the things he said that I thought was kind of interesting kind of went back to what fueled, in my opinion, a lot of the boom that occurred in the 80's - the tremendous tax advantages of real estate ownership and the at-risk rules and things of this nature.
The at-risk rules apply on an activity-by-activity basis.
The agreements established Bush's capital contribution, his amount at risk and the amount available to offset partnership losses under section 465 at-risk rules.
The first consideration in the deductibility of the loss is the AT-RISK rules of the Internal Revenue Code.
BEFORE THE ADVENT OF LLCs, THE AT-RISK rules were for the most part a poor stepchild when it came to loss limitations.
Despite the DRO, the at-risk rules under IRC [section] 465 barred a current deduction because the member wasn't personally liable for the repayment of that debt, the court said.