At-Risk Limitations

In general, section 465 limits the amount of deductible net losses shareholders can claim from certain activities. The at-risk limitations don’t apply to the corporation, but instead apply to each shareholder’s share of net losses attributable to each activity. Because the treatment of each shareholder’s share of corporate net losses depends on the nature of the activity that generated it, the corporation must report the items of income, loss, and deduction separately for each activity. See Pub. 925, Passive Activity and At-Risk Rules, for additional information.

• The identity of the at-risk activity; the items of income, loss, or deduction for the activity; other items of income, loss, or deduction; and any other information that relates to the activity (that is, distributions, shareholder loans, etc.).