Which of the following statements best reflects the objective of the at-risk rules?
A)The objective of the rules is to encourage investment in high-risk ventures.
B)The objective of the rules is to prevent taxpayers from receiving tax deductions or tax credits in excess of the amount that they are in a position to lose on their investment.
C)The objective of the rules is to protect investors from the losses they can incur on their investments in high risk partnerships.
D)The objective of the rules is to discourage investment in high-risk ventures.

Question

Quizplus · Accepted Answer

The at-risk rules were put in place to prevent taxpayers from claiming tax deductions or tax credits for losses that exceed the amount of money they actually have invested in a partnership. The objective is to limit the ability of taxpayers to use high-risk investments to reduce their tax liability, while still allowing for legitimate investments to receive tax benefits. Therefore, option B is the correct answer. Option A and D are incorrect as the objective is not to encourage or discourage investment in any specific venture. Option C is incorrect as the rules do not protect investors from losses, but rather limit their ability to claim tax benefits for losses.

Which of the Following Statements Best Reflects the Objective of the At-Risk