Instructions For Form 6198 - At-Risk Limitations

Part IV—Deductible

recontributed. Recontributed amounts

deduction or loss from the activity by

also must be included on line 16.

the total loss from the activity on

Loss

line 5. The remaining portion of each

Partners and S corporation

deduction or loss item from the

shareholders who recognize gain on

Line 21

activity is disallowed and must be

distributions from the partnership or S

carried over to next year.

corporation must include the

Deductible Loss

distributions on line 18. They also

Note: When comparing lines 5 and

must take them into account as

Paperwork Reduction Act Notice.

20, treat the loss on line 5 as a

income from the activity on line 16

We ask for the information on this

positive number only for purposes of

unless the gain is recognized in the

form to carry out the Internal

current year.

determining the amount to enter on

Revenue laws of the United States.

line 21.

4. Recourse loans (and qualified

You are required to give us the

nonrecourse financing) changed to

information. We need it to ensure that

If the loss on line 5 is equal to or

nonrecourse loans since the effective

you are complying with these laws

less than the amount on line 20,

date.

and to allow us to figure and collect

report the items in Part I in full on

5. Total losses from this activity

the right amount of tax.

your return, subject to any other

deducted since the effective date.

limitations such as the passive

You are not required to provide the

Take into account only those years in

activity and capital loss limitations.

information requested on a form that

which you had a net loss. Do not

Follow the instructions for your tax

is subject to the Paperwork Reduction

include current year losses or

return.

Act unless the form displays a valid

deductions. Also, do not include

OMB control number. Books or

If the loss on line 5 is more than

losses or deductions you could not

records relating to a form or its

the amount on line 20, you must limit

deduct because of the at-risk rules.

instructions must be retained as long

your deductible loss to the amount on

Note: The 2002 line 21 deductible

as their contents may become

line 20, subject to any other

loss reduces your at-risk investment

material in the administration of any

limitations.

as of the beginning of your 2003 tax

Internal Revenue law. Generally, tax

Examples. (a) If line 5 is a loss of

year.

returns and return information are

$400 and line 20 is $1,000, enter

6. Nonrecourse liabilities of

confidential, as required by

($400) on line 21. (b) If line 5 is a loss

property you contributed to the

section 6103.

of $1,600 and line 20 is $1,200, enter

activity since the effective date.

The time needed to complete and

($1,200) on line 21. (c) If line 5 is a

7. Any other at-risk amounts

file this form will vary depending on

loss of $800 and line 20 is zero, enter

included on line 15 that changed to

zero on line 21.

individual circumstances. The

amounts that are not at risk since the

estimated average time is:

If the amount on line 21 is made

effective date.

up of only one deduction or loss item,

8. If you are an S corporation

Recordkeeping . . . . . . . . 1 hr., 12 min.

report on your return the amount

shareholder, do not include any loans

Learning about the law or

shown on line 21, subject to any other

that were assumed by the corporation

the form . . . . . . . . . . . . .

1 hr.

limitations. Follow the instructions for

or that were liens or encumbrances

Preparing the form . . . . . 1 hr., 25 min.

your tax return to determine where to

on property you contributed to the

Copying, assembling,

report the amount on your return.

corporation since the effective date if

and sending the form to

If the amount on line 21 is made

the corporation took the property

the IRS . . . . . . . . . . . . . .

20 min.

up of more than one deduction or loss

subject to the debt.

If you have comments concerning

item in Part I (such as a Schedule C

Note: For loans, enter the amount of

the accuracy of these time estimates

loss and a Schedule D loss), a

the loan you incurred, not the current

or suggestions for making this form

portion of each such deduction or

balance of the loan.

simpler, we would be happy to hear

loss item is allowed (subject to other

from you. See the instructions for the

limitations) for the year. Determine

Line 19b

tax return with which this form is filed.

this portion by multiplying the loss on

line 21 by a fraction. Figure the

Amount At Risk

fraction by dividing each item of

If the amount on line 19b is zero, you

may be subject to the recapture rules.

See Pub. 925.

-8-

Instructions For Form 6198 - At-Risk Limitations - 2003 Page 8

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