What does at-risk amount mean on the CPA exam?
At-risk amount. How much a taxpayer could actually lose in an activity: cash and property contributed, plus debt they are personally liable for. Losses are deductible only up to it.
Defined against Sec. 465.
Which CPA exam sections use at-risk amount?
At-risk amount appears in the TCP section of the CPA exam.
Related terms
- qualified nonrecourse financing: Borrowing secured by real property from a commercial lender, where nobody is personally liable.
- carrying amount: What an asset or liability is currently shown at on the balance sheet: its original amount adjusted for depreciation, amortization, impairment or accrual.
- passive activity: A trade or business in which the taxpayer does not materially participate, plus most rental activity.
- passive income: Income from an activity the taxpayer does not materially participate in, plus most rental income.
- adjusted basis: What the taxpayer has invested in property for tax purposes: cost, plus improvements, less depreciation taken.
- statement of cash flows: The statement that explains the change in cash by sorting it into operating, investing and financing activity.