Instructions For Form 6198 - At-Risk Limitations

1. Net fair market value (FMV) of

qualified nonrecourse financing

If the activity began on or after

property you own (not used in the

(defined on page 1) used to finance

one of the effective dates shown

activity) that secures nonrecourse

the activity, to acquire property used

below and you did not complete

loans used to finance the activity, to

in the activity, or to acquire your

Part III of Form 6198 for this activity

acquire property used in the activity,

interest in the activity. Only amounts

for 2002, skip lines 11 through 14.

or to acquire your interest in the

included on line 6 can be entered on

Enter zero on line 15 and complete

activity. Include the nonrecourse

line 9.

the rest of Part III.

loans on line 9. Generally, the net

2. Cash, property, or borrowed

Effective Dates

FMV is determined when the property

amounts protected against loss by a

is pledged as security for the loan.

guarantee, stop-loss agreement, or

Generally, the effective date is the

other similar arrangement. Enter this

first day of the first tax year beginning

Do not enter the net FMV if (a) the

amount only if it was included on line

after 1975 if the activity is described

nonrecourse loan was from a person

6. Do not include items covered by

in 1 through 4 under At-Risk

who has an interest in the activity

casualty insurance or insurance

Activities on page 1.

other than as a creditor or who is

against tort liability.

related under section 465(b)(3)(C) to

If the activity is described in 5

3. Amounts borrowed from a

a person (except you) having such an

under At-Risk Activities on page 1,

person who has an interest in the

interest and (b) the activity is

the effective date is usually October

activity other than as a creditor or

described in 1 through 5 under

1, 1978, for wells started after

who is related under

At-Risk Activities on page 1.

September 30, 1978. Generally, a

section 465(b)(3)(C) to a person

However, (a) does not apply to an

well started before October 1, 1978,

(except you) having such an interest.

interest of a shareholder in the case

is not subject to the at-risk rules.

This does not apply to an interest of a

of amounts borrowed by a

The activity of holding real property

shareholder in the case of amounts

corporation from the shareholder.

is subject to the at-risk rules for

borrowed by a corporation from the

See Pub. 925 for definitions. If the

property placed in service after 1986,

shareholder. Enter these amounts

activity is described in 6 under

and for an interest acquired after

only if they were included on line 6

At-Risk Activities on page 1, you

1986 in an S corporation, partnership,

and not included under 1 or 2 above.

can include these amounts.

or other pass-through entity engaged

This applies only to activities

2. Cash and the adjusted basis of

in an activity of holding real property.

described in 1 through 5 under

other property (determined at the time

An activity of holding real property

At-Risk Activities on page 1. See

of the contribution) contributed to the

does not include the holding of

Pub. 925 for definitions and more

activity during the tax year. However,

mineral property. Holding mineral

details.

if you used your own assets to repay

property may be subject to at-risk

4. Withdrawals and distributions

a nonrecourse debt and you included

limitations other than the special rules

during the tax year — both cash and

an amount in 1 above, the amount

that apply to activities of holding real

the adjusted basis of noncash items

included as repayments cannot be

property.

(less nonrecourse liabilities to which

more than the amount by which the

the noncash items are subject) —

balance of the loan at the time of

In most cases, the effective date

including assets used in the activity to

repayment exceeds the net FMV of

for all other at-risk activities is the first

repay certain debts.

property you own (not used in the

day of the first tax year beginning

5. Nonrecourse liabilities included

activity) that secures the debt.

after 1978.

3. Loans used to finance the

on line 6 of property you contributed

If you are a partner or an S

activity, to acquire property used in

to the activity.

corporation shareholder, the date you

the activity, or to acquire your interest

became a partner or shareholder may

in the activity for which you are

Line 10b

determine whether you are subject to

personally liable, and qualified

the at-risk rules.

nonrecourse financing (defined on

Amount At Risk

page 1). Do not enter amounts

Line 11

If the amount on this line is smaller

included in 2 above or on line 6.

than your overall loss from the activity

4. Percentage depletion for this

Investment in the Activity at the

(line 5), you may want to complete

year deducted in excess of the

Effective Date

Part III to see if Part III gives you a

adjusted basis of depletable property

larger amount at risk.

Taxpayers other than partners or

for the activity.

S corporation shareholders. Use

Note: If the amount on line 10b is

the Line 11 Worksheet and its

Line 9

zero, you may be subject to the

instructions on page 5 to figure your

recapture rules. See Pub. 925.

investment in the activity at the

Decreases for the Tax Year

effective date. Enter all amounts as of

Do not include the current year

Part III—Detailed

the effective date.

deductions or losses shown on

Computation of Amount

Partners and S corporation

lines 1 through 4.

shareholders. Enter on line 11 the

At Risk

Include changes during the current

basis of your investment in the

tax year in amounts that decrease

If you completed Part III of Form 6198

partnership or S corporation at the

your amount at risk, such as the

for this activity for 2002, skip lines 11

effective date. If the partnership or S

following.

through 14. Then, see the instructions

corporation is engaged in both at-risk

1. Nonrecourse loans (including

for lines 15,16, and 18 that begin on

and not-at-risk activities, allocate your

recourse loans changed to

page 6 to determine the amounts to

investment between the at-risk and

nonrecourse loans) other than

enter on those lines.

not-at-risk activities. Enter the part

-4-

Instructions For Form 6198 - At-Risk Limitations - 2003 Page 4

Related Articles

Related forms

Related Categories