Instructions For Form 6198 - At-Risk Limitations (Page 2 of 8) in pdf

example, a bank or savings and loan

allocate income, gains, losses, and

Line 1

association).

deductions to each activity.

Ordinary Income (Loss)

A qualified person is not:

Partnerships and S corporations

•

A person related to you unless the

must give their partners and

Taxpayers other than partners or

person would be a qualified person but

shareholders a separate statement of

S corporation shareholders. Enter

for the relationship and the nonrecourse

income, expenses, and deductions for

your ordinary income or loss from the

financing is commercially reasonable

each at-risk and not-at-risk activity.

at-risk activity without regard to the

and on the same terms as loans to

at-risk limitations. This is the amount

unrelated persons,

When filling in Parts I, II, and III,

•

you get when you subtract your total

The seller of the property (or a

enter only amounts that relate to the

deductions (including prior year

person related to the seller), or

activity included on this form. Use

deductions that were not allowed

•

A person who receives a fee as a

accepted tax accounting methods to

because of the at-risk rules) from your

result of your investment in the property

figure the amounts to enter.

total income from the activity for the

(or a person related to that person).

current year.

If you are a partner or an S

Aggregation or

corporation shareholder, enter any

Do not include on line 1 capital or

items for the activity that are from your

ordinary gains and losses from the sale

Separation of Activities

investment in the activity or were

or other disposition of assets used in

File one form if your activities are listed

passed through to you on

the activity or of an interest in the

under the aggregation rules. File a

Schedule K-1 or a similar statement.

activity. These amounts, casualty or

separate form for each activity if your

theft gains and losses, and investment

Description of activity. After the

activities are listed under the separation

interest expense are entered on lines

description of the activity, if applicable,

rules.

2a, 2b, 2c, and 4.

enter the name and identifying number

Aggregation rules. All section 1245

of the partnership or S corporation.

Partners and S corporation

properties that are leased or held for

shareholders. Enter the amount from

lease and placed in service in any tax

box 1 of your current year Schedule

Part I—Current Year

year of a partnership or an S

K-1 (Form 1065 or Form 1120S) (plus

corporation are treated as one activity.

Profit (Loss) From the

any prior year ordinary loss that you

A partner in a partnership or an S

could not deduct because of the at-risk

corporation shareholder can aggregate

Activity, Including Prior

rules). In the case of a partner in an

and treat as a single activity all of the

electing large partnership, a partner’s

Year Nondeductible

properties of that partnership or S

share of at-risk activity income or loss

corporation that are included within

Amounts

may be reported in box 1 or 2 of

each of categories (1), (2), (4), and (5)

Schedule K-1 (Form 1065-B), Partner’s

under At-Risk Activities on page 1.

Taxpayers other than partners or

Share of Income (Loss) From an

S corporation shareholders. If you

Activities described in (6) under

Electing Large Partnership.

have losses or deductions from an

At-Risk Activities on page 1 that

constitute a trade or business are

earlier tax year that you could not

Lines 2a, 2b, and 2c

treated as one activity if (a) the

deduct because of the at-risk rules,

include those amounts on the

taxpayer actively participates in the

Gain (Loss)

appropriate form or schedule of your

management of that trade or business,

Combine long- and short-term capital

or (b) the business is carried on by a

current year tax return before starting

gains and losses and ordinary gains

partnership or an S corporation and

Part I. For example, if 2009 is the

and losses from the sale or other

current year, and your 2008 Schedule

65% or more of the losses for the tax

disposition of assets used in the activity

C had a $1,500 loss on line 31, but

year are allocable to persons who

or of your interest in the activity. Enter

actively participate in the management

because of the at-risk rules your loss

gains and losses without regard to the

of the trade or business. Similar rules

was limited to $500, include the $1,000

at-risk limitations, the limitation on

on your 2009 Schedule C in Part V,

apply to activities described in (1)

capital losses, or the passive activity

Other Expenses, and identify it as a

through (5) under At-Risk Activities on

loss limitations. If more than one item is

page 1.

prior year loss.

included on a line, attach a statement

Separation rules. Your activity with

Partners and S corporation

describing each item.

respect to each film, video tape, section

shareholders. If you have a loss or a

1245 property that is leased or held for

Do not include amounts on

deduction from an earlier tax year that

lease, farm, holding of real property, oil

lines 2a and 2b that are included on

you could not deduct because of the

and gas property (as defined in section

line 2c. Enter the form number or

at-risk rules, these losses and

614), or geothermal property (as

schedule letter to the left of the entry

deductions must be included in the

defined in section 614) that is not

space for line 2c. For example, if you

current year amounts you enter in

aggregated with other activities under

file Form 4684, Casualties and Thefts,

Part I. For example, if your prior year

the above rules is treated as a separate

and carry amounts from that form to

Schedule K-1 had a $1,500 loss in box

activity.

Form 4797, Sales of Business Property,

1, but because of the at-risk rules your

either (a) enter the amounts attributable

Each investment that is not a part of

loss was limited to $500, include both

to the activity from Form 4684 on line

a trade or business is treated as a

the $1,000 loss from your prior year

2c and enter “Form 4684” on the dotted

separate activity.

and the amount from your current year

line next to the entry space, or (b) enter

Schedule K-1 on line 1 of Form 6198.

the amount attributable to the activity

carried from Form 4684 to Form 4797

Closely held corporations. A closely

Specific Instructions

held corporation must apply the

on line 2b. If you carry a loss from Form

If you are engaged in more than one

limitation on the deduction for interest

4684 to Schedule A (Form 1040), enter

on line 2c either the loss from Schedule

at-risk activity or in both at-risk activities

expense under section 163(j) before

A or the loss from Form 4684.

and not-at-risk activities, you must

applying the at-risk limitations.

-2-

Instructions For Form 6198 - At-Risk Limitations Page 2

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