Yes, you understand it correctly. When someone is self employed, and they are fully at risk for their investment, you should check the box 'All investment is at risk'. Losses can be limited if you are not fully at risk for your investment in the business acitivity.
Examples of funds used that are not at risk:
You are not considered at risk for any of the following.
- Nonrecourse loans used to finance the activity, to acquire property used in the activity, or to acquire your interest in the activity (unless the nonrecourse loan is secured by your own property that is not used in the activity).
- Another example: Funds from family members where a legal contract has not been established
@B_T007
[Edited: 03/27/2024 | 7:29 AM PST]
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