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.
The IRC also grants the Treasury Department authority to issue regulations requiring aggregation or separation of activities subject to the at risk rule; it is unclear what those regulations might require.
Furthermore, should one of the taxpayer's limited partnerships be engaged in more than one activity covered by the at risk rule (e.g., oil exploration and equipment leasing), the taxpayer is generally required to treat each covered activity as a separate activity for purposes of applying the at risk limitations.
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.
According to the Senate Finance Committee Report, TRA '86, amounts at risk are reduced even if deductions that would be allowed under the at risk rule are suspended under 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).