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 rules

IRS rules limiting the deductibility of some losses, which are not allowed to exceed the amount the taxpayer has at risk,meaning the total of cash contributions and liability on promissory notes.Under certain circumstances,nonrecourse loans secured by real property but not by the individual's guarantee or endorsement may still satisfy the at-risk rules.(For more guidance,go to IRS Web site www.irs.gov and download IRS Publication 925,“Passive Activity and At Risk Rules.”)

At-Risk Rules

Special rules limiting the taxpayer's deductible business, partnership, S corporation, or real estate loss to cash invested plus debt he or she is legally obligated to pay and the adjusted basis of any property contributed.
References in periodicals archive ?
Losses of an S corporation suspended under the at-risk rules of Sec.
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.
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.