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Form 6198 At-Risk Limitations: IRC 465 Calculations, Grouping, Elections, and Schedules

Identifying Loss Deferrals, Recapture Requirements; Tracking Carry-Forward Amounts

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Wednesday, April 20, 2022

Recorded event now available

or call 1-800-926-7926

This course will provide tax advisers with an advanced guide to reporting loss limitations on Form 6198. The panel will have an in-depth discussion into the Section 465 rules and offer comprehensive and practical guidance on the complexities of maintaining at-risk amount schedules and carry-forwards. The webinar will also detail tactics for freeing up carry-forward losses and dealing with loss recapture.

Description

The at-risk loss limitation rules of IRC 465 have long challenged taxpayers and tax advisers alike. Section 465 serves as a barrier to prevent taxpayers holding partnership or S corporation shares from deducting current tax losses for activities that do not have an economic loss. For advisers and compliance professionals, determining which losses can be currently deducted and which must be deferred is complex.

Section 465(a) limits the current tax losses an individual may deduct from certain activities to the amount the taxpayer is "at-risk" for that activity. The Section further defines amounts at risk as the amount the taxpayer contributed to the activity in cash and the adjusted basis of any other property, along with any recourse debt incurred directly for use in the activity. At-risk limitation calculations are reported on Form 6198.

Section 465 is one of three provisions taxpayers must contend with to claim losses from partnership or S corp ownership. Tax professionals must have a thorough and practical grounding of the at-risk rules, including activity grouping rules and how Section 465 works with basis limitations and Section 469 passive activity loss rules to avoid costly tax mistakes.

Listen as our experienced panel of practitioners offers a thorough and practical guide to the planning, calculation, and reporting requirements of Section 465 at-risk limitation rules.

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Outline

  1. Taxpayers and activities subject to Section 465 at-risk limitations
  2. Activities that must be reported separately
  3. Aggregation rules
  4. Determination of amounts at risk
  5. Nonrecourse debt and amounts deemed not at risk
  6. Recapture rules
  7. Form 6198

Benefits

The panel will discuss these and other important topics:

  • What does--and does not--qualify as "at-risk" for purposes of calculating loss limitation on pass-through activities?
  • What are elections and grouping approaches are available to minimize the impact of loss deferral due to at-risk limitations?
  • Reporting carry-forwards and recapture of prior loss deductions on Form 6198
  • Maintaining schedules and substantiation of carry-forward disallowed losses

Faculty

Coppinger, Terence
Terence Coppinger
Partner
DSJ Advisory Group

Mr. Coppinger has been advising clients in the areas of tax information reporting and IRS practice and procedure for...  |  Read More

Hadwen, John
John Hadwen, CPA
Tax Director
Albin Randall & Bennett

Mr. Hadwen joined ARB in 2021. He is a Director specializing in providing comprehensive tax compliance and tax...  |  Read More

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