How Do the At-Risk Rules Apply to a Farm Business?

Authors

JC Hobbs, Oklahoma State University

Files

Description

The majority of farm businesses will not be subject to the at-risk rules. However, when a business is subject to these rules, the deduction of losses will be limited to the amount that the producer has at risk. The amount at risk is the amount the taxpayer could actually lose from the activity. If the at-risk limitation rules do not apply, other rules such as the passive loss rules or the hobby loss rules could still limit loss deductions. The purpose of this article is to explain the at-risk limitations as they apply to both farm and non-farm business activities. The at-risk limitations will seldom affect either small farms or small-business owners. The tax effect of the at-risk rules can be unexpected, so it is important to have a basic understanding of the rules and visit with your tax advisor about your business and the at-risk rules to avoid surprises.

Publisher

Rural Tax Education

Publication Date

7-2016

Keywords

at-risk, rules, farm, business

Disciplines

Education | Higher Education | University Extension

Recommended Citation

Hobbs, JC, "How Do the At-Risk Rules Apply to a Farm Business?" (2016). Rural Tax Education. 32.
https://digitalcommons.usu.edu/rural_tax/32