Practice Quiz

Financial Planner

Category - Tax Planning

Start a Study Session Sign up for Question of the Day
What is the limit of loss recognition on at-risk activities?
  1. $10,000
  2. The taxpayer’s adjusted basis in the property
  3. The taxpayer’s adjusted basis in the property, plus any loans for the activity where the taxpayer is personally liable, minus any previously allowed losses
  4. The taxpayer’s adjusted basis in the property, plus any non-recourse loans, minus any previously allowed losses
Explanation
Answer: C - Taxpayers with an at-risk activity cannot deduct losses that are more than his or her adjusted basis of the property, plus personal liabilities related to the business, minus any previously allowed losses. The IRS supplies a form that taxpayers can use to figure the amount of any at-risk limitation.
Was this helpful? Upvote!
Login to contribute your own answer or details
Start a Study Session Sign up for Question of the Day

Top questions

Related questions

Most popular on PracticeQuiz