K1 pass through

Hello

When adding my K1s to my personal tax returns I am seeing this option

All of my investment in this activity is at risk.

Selecting it makes a significant difference in the refund. Why?

Our business is 100% self-financed so all the capital and expenses are paid by us.

Are we at risk?

Thank you

337

Level 2

Feb 21, 2022 4:36:03 PM

I believe that it means that if you are personally liable for any losses, your investment is at risk.

Level 15

Feb 21, 2022 5:07:41 PM

assuming it is not a publicly traded partnership, then the loss it is showing would only be deductible if you are at risk. at risk should have no effect if there is net income. generally, if you are not 100% at risk the IRS wants form 6198 where the at-risk amount and allowable loss are computed

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K1 pass through