The amount for which you are at risk is your total investment in the royalty property producing the royalties. If no one else invested in the venture and only you are at risk for any loss if there is no recourse other than you.
At-Risk Amounts
You’re at risk in any activity for:
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The money and adjusted basis of property you contribute to the activity, and
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Amounts you borrow for use in the activity if:
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You’re personally liable for repayment, or
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You pledge property (other than property used in the activity) as security for the loan.
Amounts borrowed.
You’re at risk for amounts borrowed to use in the activity if you’re personally liable for repayment. You’re also at risk if the amounts borrowed are secured by property other than property used in the activity. In this case, the amount considered at risk is the net fair market value of your interest in the pledged property. The net fair market value of property is its fair market value (determined on the date the property is pledged) less any prior (or superior) claims to which it’s subject. However, no property will be taken into account as security if it’s directly or indirectly financed by debt that’s secured by property you contributed to the activity.
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