The at-risk provisions and the passive activity loss provisions decrease the tax attractiveness of investments in real estate for partnerships and for limited liability companies.

Question

Quizplus · Accepted Answer

The at-risk provisions limit the amount of loss a taxpayer can claim to the amount they have at risk in the investment, while the passive activity loss provisions restrict the ability to deduct losses from passive activities unless the taxpayer materially participates in the activity. Both provisions can decrease the tax benefits of investing in real estate through partnerships and limited liability companies by limiting the deductibility of losses.

The At-Risk Provisions and the Passive Activity Loss Provisions Decrease