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cbam3d
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I am part of family LLC for rented farm land we inherited. Is this considered "at risk"?

 
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I am part of family LLC for rented farm land we inherited. Is this considered "at risk"?

You now own the inherited land. So you are At-Risk.

At-Risk Rules

The at-risk rules are designed to prevent you from claiming losses that exceed your actual investment in a business. The rules limit your allowable loss in a business activity to the lesser of the following:

 - the amount of the loss
 - the amount you have at risk in the activity

Generally, you are considered to be at risk up to the amount of cash and the adjusted basis of other property you contribute to the activity, plus certain amounts you borrowed for use in your business and for which you are personally responsible.

You are not considered to be at risk if:

 - You do not have to repay borrowed amounts because you have insurance, nonrecourse financing, a guarantee, or any other arrangement that protects you from loss.
 - You borrowed money from a lender who has an interest in the business other than as a creditor.

If you have a loss that is not allowed this year due to the at-risk rules, you may carry the loss forward to a year when you have amounts at risk. Be sure to maintain records of losses disallowed in a certain year due to the at-risk limitations, so that you remember to use them in later years.

You can get IRS forms and publications by calling 1-800-TAX-FORM (1-800-829-3676) or by visiting the IRS website at www.irs.gov.

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I am part of family LLC for rented farm land we inherited. Is this considered "at risk"?

You now own the inherited land. So you are At-Risk.

At-Risk Rules

The at-risk rules are designed to prevent you from claiming losses that exceed your actual investment in a business. The rules limit your allowable loss in a business activity to the lesser of the following:

 - the amount of the loss
 - the amount you have at risk in the activity

Generally, you are considered to be at risk up to the amount of cash and the adjusted basis of other property you contribute to the activity, plus certain amounts you borrowed for use in your business and for which you are personally responsible.

You are not considered to be at risk if:

 - You do not have to repay borrowed amounts because you have insurance, nonrecourse financing, a guarantee, or any other arrangement that protects you from loss.
 - You borrowed money from a lender who has an interest in the business other than as a creditor.

If you have a loss that is not allowed this year due to the at-risk rules, you may carry the loss forward to a year when you have amounts at risk. Be sure to maintain records of losses disallowed in a certain year due to the at-risk limitations, so that you remember to use them in later years.

You can get IRS forms and publications by calling 1-800-TAX-FORM (1-800-829-3676) or by visiting the IRS website at www.irs.gov.

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