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

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

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


Conducted on Tuesday, September 26, 2017

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar 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 in which they 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 at which 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 the 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 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

Barnett, Robert
Robert S. Barnett

Partner
Capell Barnett Matalon & Schoenfeld

Mr. Barnett practice encompasses business and tax planning, estate planning and federal and state tax dispute...  |  Read More

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