At-Risk Income Recapture

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  • Unregistered

    #1

    At-Risk Income Recapture

    Last year the taxpayer had losses in an activity that were limited due to the amount at risk. This year they have income in the activity, but their at-risk amount has decreased below zero. We have losses that were taken in prior years, but other years where income was claimed. Are they subject to at-risk income recapture? If so, to what extent?
  • Bees Knees
    Senior Member
    • May 2005
    • 5456

    #2
    It depends. You left out some important details. Like why at-risk basis went down in a year where there is income.

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    • Unregistered

      #3
      The at-risk basis went down because the shareholder loan liability account was reduced.

      Comment

      • Bees Knees
        Senior Member
        • May 2005
        • 5456

        #4
        Then that would result in recapture. TTB, page 7-12 under "Recapture rule - at-risk basis less than zero" describes how to calculate the recapture amount.

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