With respect to limited partnerships, the purpose of the at-risk rules is:
A)to ensure that the general partner is protected from putting all assets at-risk to cover partnership losses.
B)to ensure that general partners will have the ability to obtain financing from limited liability investors by ensuring limited liability investors know how much is at-risk.
C)to ensure that the tax deductions available to limited partners do not exceed the amount they have at-risk.
D)to ensure that the tax deductions available to limited partners are sufficient to reward investors for putting their funds at-risk.

Question

Quizplus · Accepted Answer

The purpose of the at-risk rules is to ensure that the tax deductions available to limited partners do not exceed the amount they have at-risk. This means that limited partners cannot deduct losses from the partnership that exceed their investment in the partnership. The rules are in place to prevent abuse of tax deductions and ensure the accuracy of tax returns.

With Respect to Limited Partnerships, the Purpose of the At-Risk