The "at-risk" rule acts to prevent tax shelters from generating large losses for their investors while exposing them to little personal risk.

Question

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The "at-risk" rule is designed to limit the amount of losses that taxpayers can claim from certain types of investments, such as tax shelters, to the amount that they have actually "at risk" in the investment. This helps to prevent tax shelters from being used solely as a way to generate large losses for tax purposes, without exposing investors to any real risk.

The "At-Risk" Rule Acts to Prevent Tax Shelters from Generating