10.21 Carryover of Disallowed Losses

A loss disallowed in a current year by the at-risk limitation may be carried over and deducted in the next taxable year, provided it does not fall within the at-risk limits or the passive loss limits in that year. The loss is subject to an unlimited carryover period until there is an at-risk basis to support the deduction. This may occur when additional contributions are made to the business or when the activity has income which has not been distributed.

Filing Tip

Carryover Losses

Losses disallowed by at-risk rules are carried over and may be deductible in a later year.

- - - - - - - - - -

Gain from the disposition of property used in an at-risk activity is treated as income from the activity. In general, the reporting of gain will allow a deduction for losses disallowed in previous years to be claimed in the year of disposition.