☰
✕
Sign In

Why sign in to the Community?

  • Submit a question
  • Check your notifications
Sign in to the Community or Sign in to TurboTax and start working on your taxes
Level 3
posted Mar 30, 2022 9:03:31 PM

Do I check "at-risk" if my Ending capital account is a negative figure?

For the 3rd year in a row I have a loss (passive) on my K1 and cannot take the loss on my taxes.  TurboTax has carried the losses from 2019 & 2020 as a carryover.  How do I answer TurboTax when it asks if my investment is at risk?  Does the "Ending Capital Account" figure on my K1 (which is currently a negative dollar amount) affect if I am or am not at risk?

0 1 257
1 Replies
Expert Alumni
Mar 31, 2022 5:42:50 AM

No, the Ending Capital Account on Schedule K-1 has no affect on your at-risk status.

 

If you are personally responsible for the business and have no one who will give you your investment back if the business fails, you are considered to be "at risk". In other words, you have invested your own money in the business.

 

Here are some examples for when an investor is not at risk:

  • 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 other 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.