Yes, the reason is that the $XX you invested could all be lost.
As a limited partner that may be the only amount you can lose, but you can lose, but you can lose your entire investment.
If the company incurs some debt or lawsuit you can only lose your investment, nothing more.
EDITED 3/21/2018 2:43 PM (CST) to add more detail below:
Not at Risk, if you have amounts invested in this business for which you are not at risk, such as the following:
---Non-recourse loans used to finance the business
---Cash, property or borrowed amounts used in the business that are protected against loss by a guarantee, stop-loss agreement, or another similar arrangement (excluding casualty insurance and insurance against tort liability).
---Amounts borrowed for use in the business from a person who has an interest in the business, other than as a creditor.
At Risk rules
Usually, this is in relation to an at risk limit.
Basically the money you have in it is at risk. (investment losses money you loose) sometimes there is insurance against losses or the broker may have guaranteed your investment.
If you do not plan to make a profit then you have a hobby and this is not deductible.
What they are looking at if it goes poof what do you loose or is there something else to cover the loss.
