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.

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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.

Essentials of tax reform

Losses of an S corporation suspended under the at-risk rules of Sec.

Deducting losses after an S corporation terminates

465 regulations provide significant guidance and detailed examples of the application of the at-risk rules. In addition to the general policy that, when no final regulations are available, the IRS Chief Counsel will not take a position harsher to the taxpayer than that available in proposed regulations (Internal Revenue Manual [section]32.1.1.2.2), the long-standing nature of these proposed regulations has resulted in a de facto reliance not usually afforded to other proposed guidance.

The at-risk rules for partnerships

Under paragraph 111(1)(e) limited partnership losses that cannot be deducted against other sources of income because of the at-risk rules can generally be carried forward indefinitely and claimed against future limited partnership income.

TEI liaison meeting with Canada Revenue Agency on income tax questions

The passive activities and at-risk rules provide hurdles that taxpayers must overcome in order for certain losses to offset other sources of income in a given year.

Chapter 17: Passive activities and at-risk rules

A beneficiary of a qualified subchapter S trust may deduct suspended losses under the at-risk rules and the passive loss rules when the trust disposes of the S corp stock.

A new corporate tax relief bill: highlights from the American Jobs Creation Act of 2004

The second limitation that may limit the current use of losses is the at-risk rules of IRC section 465.

Partnerships, LLCs, LLPs, and S corporations

Alternative minimum tax 0.00 1.46 10.2 29.6 58.7 4.45 Passive activity losses 0.00 2.93 15.1 31.2 50.2 4.29 At-risk rules 1.46 5.85 17.1 31.2 44.4 4.10 Supplemental inc.

Issues in Federal Income Tax Complexity

* At-Risk Rules. The proposed bill would modify the "at-risk" rules for real estate to provide that a taxpayer is considered "at risk" for certain financing so long as the financing is qualified publicly-traded debt.

APARTMENT INDUSTRY PRAISES HOUSE TAX RELIEF LEGISLATION AS A SIGNIFICANT STEP FORWARD

In addition, the at-risk rules were extended to real estate.

Tax consequences of solution transactions

The 1976 TRA at-risk rules applied to non-real estate tax shelters increase the value of both REITs and real estate corporations relative to entities holding non-real estate tax shelter assets.

The effects of tax reform on real estate: some empirical results

(13) The at-risk rules are covered in detail in Chapter 17, Passive Activity and At-Risk Rules.