IRS · Official form

Form 6198, At-Risk Limitations

Form 6198 limits the loss you can deduct from a business or investment activity to the amount you actually have at risk in it. Fill in the official IRS PDF below and download it for your return.

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What is 6198?

The at-risk rules stop taxpayers from deducting losses that exceed what they could really lose: generally the money and adjusted basis of property they contributed, plus certain amounts borrowed for the activity for which they are personally liable or have pledged other property. Form 6198 figures the current-year profit or loss from the activity, your amount at risk, and the deductible loss.

Losses disallowed by the at-risk limits are not gone for good. They carry forward and can be deducted in later years when your at-risk amount increases. The form offers both a simplified and a detailed computation of the amount at risk.

Who files 6198?

Individuals with a loss from a business or income-producing activity where some of the investment is not at risk
Partners and S corporation shareholders whose share of losses may exceed their at-risk amount
Estates and trusts with losses from at-risk activities
Taxpayers with nonrecourse financing in an activity, other than qualified real estate nonrecourse financing

How to fill out 6198

Figure the current-year profit or loss from the activity in Part I, including gains and losses from selling assets used in it.
Choose the simplified computation in Part II or the detailed computation in Part III to figure your amount at risk.
Compare the loss to the amount at risk to find the deductible loss in Part IV.
Report the allowed loss on the schedule where the activity belongs, such as Schedule C, E, or F.
Download the completed PDF, attach it to your return, and track any disallowed loss to carry forward.

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Page 1 34 fields

Name(s) shown on return

Identifying number

Description of activity (see instructions)

1. Ordinary income (loss) from the activity (see instructions).

2. Gain (loss) from the sale or other disposition of assets used in the activity (or of your interest in the activity) that you are

2b. Form 4797.

2c. Other form or schedule.

3. Other income and gains from the activity, from Schedule K-1 (Form 1065) or Schedule K-1 (Form 1120-S), that were not included on lines 1

4. Open parenthesis. Other deductions and losses from the activity, including investment interest expense allowed from Form 4952, that were

5. Current year profit (loss) from the activity. Combine lines 1 through 4. See the instructions before completing the rest of this form.

6. Adjusted basis (as defined in section 1011) in the activity (or in your interest in the activity) on the first day of the tax year. Do

7. Increases for the tax year (see instructions).

8. Add lines 6 and 7.

9. Decreases for the tax year (see instructions).

10a. Subtract line 9 from line 8.

10b. If line 10a is more than zero, enter that amount here and go to line 20 (or complete Part I I I). Otherwise, enter 0 and see Pub. 925

11. Investment in the activity (or in your interest in the activity) at the effective date. Do not enter less than zero.

12. Increases at effective date.

13. Add lines 11 and 12.

14. Decreases at effective date.

15. Amount at risk (check box that applies): a. At effective date. Subtract line 14 from line 13. Do not enter less than zero.

15b. From your prior year Form 6198, line 19b. Do not enter the amount from line 10b of your prior year form.

15. Amount.

16. Increases since (check box that applies): a. Effective date.

16b. The end of your prior year.

16. Amount.

17. Add lines 15 and 16.

18. Decreases since (check box that applies): a. Effective date.

18b. The end of your prior year.

18. Amount.

19a. Subtract line 18 from line 17.

19b. If line 19a is more than zero, enter that amount here and go to line 20. Otherwise, enter 0 and see Pub. 925 for information on the

Part I V. Deductible Loss. 20. Amount at risk. Enter the larger of line 10b or line 19b.

If only part of the loss is subject to the passive activity loss rules, report only that part on Form 8582 or Form 8810, whichever applies.

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Frequently asked questions

What does "at risk" actually mean?

Roughly, the cash and adjusted basis of property you put into the activity, plus borrowed amounts you are personally liable to repay or have secured with other property. Nonrecourse loans generally do not count, with an exception for qualified nonrecourse financing on real estate.

Do at-risk rules replace the passive activity rules?

No, they apply first. A loss allowed under the at-risk rules on Form 6198 may still be limited by the passive activity rules on Form 8582 before it reaches your return.

What happens to a loss the at-risk rules disallow?

It carries forward to the next tax year and is treated as a deduction from the same activity, usable once your at-risk amount grows, for example by contributing more money or earning income in the activity.

Form 6198, At-Risk Limitations

What is 6198?

Who files 6198?

How to fill out 6198

Quick fill 6198 on this page

Frequently asked questions

Related forms

Form 8582, Passive Activity Loss Limitations

Schedule C, Profit or Loss From Business

Schedule E (Form 1040), Supplemental Income and Loss