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IRSOther IRS Forms (4000–6999)

Official form guide

Form 6198: At-Risk Limitations

IRS Form 6198 is used to figure the profit or loss, amount at risk, and deductible loss for an at‑risk activity in the current year. It must be filed by individuals, estates, trusts, and certain closely held C corporations.

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Form Overview

IRS Form 6198 - At-Risk Limitations

IRS Form 6198 is used to figure the profit or loss, amount at risk, and deductible loss for an at‑risk activity in the current year. It must be filed by individuals, estates, trusts, and certain closely held C corporations.

The form collects the current‑year profit or loss (Part I), the amount at risk using either Part II or Part III, and the deductible loss (Part IV). It also requires prior‑year losses that were limited by the at‑risk rules.

Risk Radar

Scan points
  • 1Leaving line 10b zero can trigger recapture rules.
  • 2Failing to include prior‑year losses on the current year Schedule before starting Part I.
  • 3Using Part II when the adjusted basis is unknown, which requires Part III.
  • 4Skipping lines 11‑14 in Part III when the activity began after the effective date and prior‑year Part III was not completed.
  • 5Entering the amount from line 10b of the prior year on line 15 instead of line 19b as required.

Plain English

Form 6198 tells the IRS how much money you actually risk in a business activity and how much of a loss you can deduct. It adds any prior‑year losses you couldn’t use before. The form then calculates the amount you may claim as a deduction this year.

Submission Date

  • Filing date: 2025-11-10 22:10:10
  • Preparation window: collect IDs, supporting records, and signatures in advance.
  • Final review: verify names, dates, and required fields before submission.

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Glossary Terms

currentdeduct

Hover a term to preview the meaning.

What this form is for

  • Use this form when you need to figure the profit (loss) from an at‑risk activity, the amount at risk, and the deductible loss for the current year.
  • Do not use it when the activity is exempt from the at‑risk rules, such as certain equipment leasing activities by closely held C corporations or holding real property placed in service before 1987.
  • Check Form 8582 instead when you have a current‑year profit from a passive activity and a loss from another passive activity.

Form selector

Use this form or another form?

You have a passive activity profit and a loss from another passive activity

Determines passive activity loss limitations

✓ Verify that both activities are reported as passive

Form 8582

Your corporation has a passive activity loss

Applies corporate passive activity loss and credit limits

✓ Confirm corporation status and passive classification

Form 8810

You sold or otherwise disposed of assets used in the at‑risk activity

Reports gain or loss from disposition of business property

✓ Ensure the sale is reported on the correct line of Form 4797

Form 4797

Deadline or filing window

Not stated in the official source.

Checklist

What you need before filling it out

1

Ordinary income (loss) from the activity (line 1)

Income statement or Schedule C · Form 6198 line 1

⚠ Omitting losses from Schedule C✕ Medium
2

Gain (loss) from sale of assets (line 2a)

Form 4797 or Schedule D details · Form 6198 line 2a

⚠ Reporting gain on wrong schedule✕ Medium
3

Description of activity

Narrative description of the at‑risk activity · Form 6198 Part I header

⚠ Leaving description blank✕ Low
4

Identifying number

Taxpayer’s SSN or EIN · Form 6198 top box

⚠ Mismatching number with return✕ High
5

Name(s) shown on return

Taxpayer’s name as on Form 1040 · Form 6198 top box

⚠ Misspelling name✕ Low

Before you submit

  1. 1Verify the revision date on the form is November 2025.
  2. 2Enter the taxpayer’s name exactly as it appears on the tax return.
  3. 3Enter the correct SSN or EIN in the identifying number field.
  4. 4Provide a clear description of the at‑risk activity.
  5. 5Report ordinary income or loss on line 1.
  6. 6Report gain or loss from disposition on line 2a, 2b, or 2c as appropriate.
  7. 7If more than one item is on a line, attach a statement describing each item.
  8. 8Do not enter any amounts on line 2 statement instruction as directed.
  9. 9Attach Form 6198 to the tax return.
  10. 10Keep a copy of the completed Form 6198 for your records.
  11. 11Ensure the tax return containing Form 6198 is signed.

How to file this form

  1. 1Determine whether the at‑risk rules apply to the activity.
  2. 2Calculate current‑year profit or loss and the amount at risk using the worksheet.
  3. 3Complete Form 6198 lines 1‑4 and fill in identifying information.
  4. 4Attach Form 6198 to the appropriate tax return and retain a copy for your records.
  5. 5Mail the return to the IRS address for your filing type or e‑file as permitted, keeping the delivery receipt as proof.

Known limitations

  1. 1Form 6198 does not require completing Part II when Part III is used — Instructions p.3
  2. 2Sole proprietors filing Schedules C or F must not reduce the adjusted basis amount by any liabilities — Instructions p.3
  3. 3Partners must determine adjusted basis using Pub. 541 rather than on Form 6198 — Instructions p.3

Field map

Compact field-by-field guide

6 fields

General Info

2 items

Taxpayer Name and TIN

Full legal name and taxpayer identification number (SSN or EIN).

Requiredtext
Address

Current mailing address.

Requiredtext

Details

2 items

Required Information

Complete all applicable sections of this form according to the official IRS instructions.

Requiredtext
Amount (if applicable)

Enter the relevant dollar amount if this form involves tax calculation.

amount

Certification

1 items

Certification Statement

Read and acknowledge any certifications required by this form.

Requiredcheckbox

Signatures

1 items

Signature

Sign and date. Unsigned forms cannot be processed.

Requiredsignature
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Current form status
IRS

Form 6198 is the November 2025 revision; the instructions direct users to www.irs.gov/Form6198 for the latest information.

What changed or needs a fresh check

  • Edition date — confirm the form shows November 2025
  • Fee — Not stated in the official source
  • Mailing address — Not stated in the official source
  • Signature — Not stated in the official source

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Quick Facts

Individuals (including those filing Schedules C, E, and F), estates, trusts, and certain closely held C corporations described in section 465(a)(1)(B) must file IRS Form 6198.
The form collects the current‑year profit or loss (Part I), the amount at risk using either Part II or Part III, and the deductible loss (Part IV). It also requires prior‑year losses that were limited by the at‑risk rules.
Not stated in the official source.
Not stated in the official source.
If the amount on line 10b is zero, you may be subject to the recapture rules, which can increase tax liability.
First, include any prior‑year losses that were limited by the at‑risk rules before completing Part I. Then calculate the current‑year loss in Part I. Choose Part II for a simplified amount‑at‑risk calculation or Part III for a detailed method, and complete the appropriate lines. Finally, determine the deductible loss in Part IV and sign the form before filing.

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After you file

  1. 1Attach Form 6198 to the tax return before filing
  2. 2Keep a copy of the completed Form 6198 with your tax records
  3. 3Retain the copy for several years in case the IRS requests it
  4. 4If an error is discovered, file an amended return (Form 1040X) and include a corrected Form 6198
  5. 5Review the attached Form 6198 for correct line entries before mailing
  6. 6Do not expect a separate acknowledgment; the IRS processes it with the return

Sources

  • SRCInstructions p.1 — purpose of Form 6198 is to figure profit (loss), amount at risk, and deductible loss for the current year
  • SRCInstructions p.1 — who must file: individuals, estates, trusts, and certain closely held C corporations
  • SRCInstructions p.3 — do not need to complete Part II if Part III is used
  • SRCInstructions p.3 — sole proprietors must not reduce the amount on line 6 by any liabilities
  • SRCInstructions p.3 — partners should use Pub. 541 for adjusted basis calculations
  • SRCInstructions p.3 — S corporation shareholders should use the Instructions for Form 1120‑S for adjusted basis
  • SRCInstructions p.7 — line 15 amount at risk comes from line 19b of prior year, not line 10b
  • SRCInstructions p.7 — loans personally liable and qualified nonrecourse financing are included as increases on line 16
  • SRCInstructions p.7 — do not include current‑year income or gains on line 16
  • SRCInstructions p.8 — S corporation shareholders must not include loans assumed by the corporation on line 18

Common confusion points

Do I need to fill out Part II if I already used Part III?

The instructions state Part II is not required when Part III is used.

→ Verify that Part III is completed and leave Part II blank.

Should I reduce the adjusted basis line by my liabilities as a sole proprietor?

Instructions for sole proprietors say not to reduce by liabilities.

→ Enter the full adjusted basis without subtracting any liabilities.

Which prior‑year amount do I enter on line 15 for amount at risk?

Line 15 requires the amount from line 19b of the prior year if Part III was used, not line 10b.

→ Locate line 19b on last year's Form 6198 and copy that amount.

Do I include current‑year income in the net‑income increase on line 16?

Instructions say do not include current‑year income or gains.

→ Only include net income from years after the prior tax year, excluding the current year.

Are loans I personally guarantee for the activity considered at‑risk?

Loans you are personally liable for and qualified nonrecourse financing are included as increases.

→ Add those loan amounts on line 16 as specified.

If I am an S corporation shareholder, do I report loans assumed by the corporation on line 18?

S corporation shareholders should not include loans assumed by the corporation in decreases.

→ Exclude such loans from line 18 entries.

Workflow map

Related forms and next steps

5 signals

Before

Form 1040 – main individual income tax return where Form 6198 is attached

Current

6198

After

Form 1040X – file an amended return to correct errors on Form 6198

Often used with

Form 8582 – Passive Activity Loss Limitations when profit is from a passive activityForm 8810 – Corporate Passive Activity Loss and Credit Limitations for corporate filersForm 1120-S – S corporation shareholders reference this for adjusted basis calculations

Questions about IRS Form 6198

What is IRS Form 6198 used for?

Form 6198 tells the IRS how much money you actually risk in a business activity and how much of a loss you can deduct. It adds any prior‑year losses you couldn’t use before. The form then calculates the amount you may claim as a deduction this year.

Who must file IRS Form 6198?

Individuals (including those filing Schedules C, E, and F), estates, trusts, and certain closely held C corporations described in section 465(a)(1)(B) must file IRS Form 6198.

What information does IRS Form 6198 require?

The form collects the current‑year profit or loss (Part I), the amount at risk using either Part II or Part III, and the deductible loss (Part IV). It also requires prior‑year losses that were limited by the at‑risk rules.

How do I complete IRS Form 6198?

First, include any prior‑year losses that were limited by the at‑risk rules before completing Part I. Then calculate the current‑year loss in Part I. Choose Part II for a simplified amount‑at‑risk calculation or Part III for a detailed method, and complete the appropriate lines. Finally, determine the deductible loss in Part IV and sign the form before filing.

What happens if IRS Form 6198 is filed incorrectly?

If the amount on line 10b is zero, you may be subject to the recapture rules, which can increase tax liability.

Do I need to fill out Part II if I already used Part III?

The instructions state Part II is not required when Part III is used. Verify that Part III is completed and leave Part II blank.

Should I reduce the adjusted basis line by my liabilities as a sole proprietor?

Instructions for sole proprietors say not to reduce by liabilities. Enter the full adjusted basis without subtracting any liabilities.

Which prior‑year amount do I enter on line 15 for amount at risk?

Line 15 requires the amount from line 19b of the prior year if Part III was used, not line 10b. Locate line 19b on last year's Form 6198 and copy that amount.

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Public DomainCreated by the U.S. federal government. Not subject to copyright (17 USC § 105). Freely copyable without restriction.
Public DomainCreated by the U.S. federal government. Not subject to copyright (17 USC § 105). Freely copyable without restriction.
Public DomainCreated by the U.S. federal government. Not subject to copyright (17 USC § 105). Freely copyable without restriction.
Public DomainCreated by the U.S. federal government. Not subject to copyright (17 USC § 105). Freely copyable without restriction.
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