Losses of an S corporation suspended under the at-risk rules
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]126.96.36.199.2), the long-standing nature of these proposed regulations has resulted in a de facto reliance not usually afforded to other proposed guidance.
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.
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.
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.
The second limitation that may limit the current use of losses is the at-risk rules
of IRC section 465.
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.
* 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.
In addition, the at-risk rules
were extended to real estate.
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.
(13) The at-risk rules
are covered in detail in Chapter 17, Passive Activity and At-Risk Rules
Other potential gain recognition exists under the at-risk rules
of IRC section 465.