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Form 6198: At-Risk Limitations
IRS Form 6198 is used to calculate At-Risk Limitations for an activity and is filed by individuals, estates, trusts, and certain closely held C corporations. The form allows filers to figure the deductible loss for the current year.
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IRS Form 6198 - At-Risk Limitations
IRS Form 6198 is used to calculate At-Risk Limitations for an activity and is filed by individuals, estates, trusts, and certain closely held C corporations. The form allows filers to figure the deductible loss for the current year.
Risk Radar
Scan points- 1Ensure you include prior year losses in Part V before starting Part I; otherwise, they may not be recognized.
- 2Failing to include prior year losses in the current year's entry for Part I.
- 3Using Line 10b amount when Part III is required and yields a larger at-risk amount.
- 4Not checking box 'b' on Line 15 when completing Part III from the prior tax year.
- 5Entering the amount from line 10b of the prior year form instead of line 19b on Line 15.
Plain English
This form helps determine how much of a business or investment loss you can actually deduct on your taxes this year. It ensures that the amount of loss you claim is limited to the amount you have personally risked in that activity. You use it alongside other tax forms like Schedule C and Schedule D.
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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What this form is for
- Use this form when calculating the profit (loss) from an at-risk activity for the current year (Part I), determining the amount at risk for the current year (Part II or Part III), or finding the deductible loss for the current year (Part IV).
- Do not use Form 6198 if your activities are listed under the separation rules and you should file a separate form for each activity.
- Check Form 8582 instead when your current year profit is from a passive activity and you have a loss from any other passive activity.
Form selector
Use this form or another form?
Filer has Schedule C, E, or F income
The filer is an individual reporting on these schedules.
✓ Check Part I Line 1 for ordinary income (loss).
Corporation engages in equipment leasing
Certain activities are exempt from at-risk rules if they involve equipment leasing by a closely held C corporation.
✓ Verify applicability using sections 465(c)(4), (5), and (6).
Not stated in the official source
Activity involves property placed in service before 1987
Holding real property or an interest acquired before 1987 in a pass-through entity may be exempt from at-risk rules.
✓ Confirm if mineral property is involved, as that exception does not apply to it.
Not stated in the official source
Activity involves income/loss from disposition of assets
This reports the gain or loss from selling assets used in the activity.
✓ Ensure you report this on Part I Line 2.
Deadline or filing window
The form does not state a specific filing deadline. However, if a filer has losses or deductions from an earlier tax year that could not be deducted due to at-risk rules, those amounts must be included on Form 6198 before starting Part I.
Checklist
What you need before filling it out
Part I: Current Year Profit (Loss)
Income, gains, deductions, and losses from activity · Form 6198 Part I
Who must file
Individuals, estates, trusts, or certain closely held C corporations · Instructions p.1
Not at Risk (Item 2)
Cash and adjusted basis of property contributed during the year · Instructions p.2
Aggregation Rule
All section 1245 properties leased or held for lease in a partnership/S corp · Instructions p.2
Not at Risk (Item 3)
Person receiving a fee from investment · Instructions p.2
Special Exception
Qualifying business of a qualified C corporation · Instructions p.1
Before you submit
- 1Ensure all income, gains, deductions, and losses from lines 1 through 4 are reported on the forms/schedules used.
- 2Attach Form 6198 to your tax return.
- 3Keep a copy of completed Form 6198 for your records.
- 4If applicable, confirm if you have recapture income even with a current year profit (due to reduction in amount at risk).
- 5Verify that the activity is not excluded because it involves equipment leasing by a closely held C corporation (unless an exception applies).
- 6Check if any amounts included in 'Increases' are repayments of nonrecourse debt, and confirm this repayment limit calculation.
- 7If using Part I Line 1, verify you have reported the ordinary income/loss from the activity.
How to file this form
- 1Calculate the current year profit (loss) in Part I by reporting all relevant income, gains, deductions, and losses on lines 1 through 4.
- 2Determine if your activities are aggregated or separated; file one form for aggregation or a separate form for each activity under separation rules.
- 3Report any amounts that are not at risk (such as cash contributions or fee recipients) using the appropriate sections.
- 4Attach Form 6198 to your tax return and keep a copy of the completed document for future reference.
Known limitations
- 1The at-risk rules of section 465 limit the amount of loss that can be deducted to the amount at risk.
- 2If a current year profit is from a passive activity and there is a loss from any other passive activity, filers must consult Instructions for Form 8582 or Form 8810, depending on which applies.
- 3Even if a current year profit appears on line 5 of Form 6198, recapture income may exist if a distribution or transaction during the year reduced the amount at risk in the activity to less than zero at the close of the tax year.
Field map
Compact field-by-field guide
General Info
2 items
Full legal name and taxpayer identification number (SSN or EIN).
Current mailing address.
Details
2 items
Complete all applicable sections of this form according to the official IRS instructions.
Enter the relevant dollar amount if this form involves tax calculation.
Certification
1 items
Read and acknowledge any certifications required by this form.
Signatures
1 items
Sign and date. Unsigned forms cannot be processed.
Almost done reviewing the fields?
Fillable formOpen in Editor->The current edition is Revision November 2025, and filers can find instructions and latest information at www.irs.gov/Form6198.
What changed or needs a fresh check
- Edition date — confirm the revision reads November 2025.
- Fee — Not stated in the official source.
- Mailing address — Not stated in the official source (but instructions reference www.irs.gov/Form6198).
- Signature — The form requires a signature, though the specific location is not detailed in these excerpts.
Quick Facts
Downloads
After you file
- 1Attach Form 6198 to the tax return along with all other forms and schedules showing income, gains, deductions, and losses.
- 2Keep a copy of Form 6198 for personal records.
- 3For partners filing Form 6198, refer to Pub. 541 to figure the adjusted basis.
- 4For S corporation shareholders filling out Form 6198, consult the Instructions for Form 1120-S regarding adjusted basis.
Sources
- SRCInstructions p.1 — Purpose of Form 6198 is to figure the profit (loss) from an at-risk activity for the current year (Part I), the amount at risk for the current year (Part II or Part III), and the deductible loss for the current year (Part IV).
- SRCInstructions p.1 — Individuals, estates, trusts, and certain closely held C corporations file Form 6198.
- SRCInstructions p.3 — All income, gains, deductions, and losses from lines 1 through 4 on attached forms must be reported and Form 6198 must be attached.
- SRCInstructions p.7 — Line 15 (Amount At Risk) requires checking box b if Part III was completed prior year, and entering the amount from line 19b of the prior form.
- SRCInstructions p.8 — Line 18 (Decreases) requires checking box b if Part III was completed prior year, and entering decreases described in items (1) through (8).
- SRCInstructions p.3 — For sole proprietors filing Schedules C and F, the Adjusted Basis on Line 6 must not be reduced by any liabilities.
Common confusion points
Should I reduce the Adjusted Basis on Line 6 if I am a sole proprietor filing Schedule C or F?
The source says not to reduce the amount on Line 6 for sole proprietors; does this mean liabilities are ignored entirely for that line?
When calculating Increases on Line 16, do I include amounts from all nine listed items, or only specific ones?
If I completed Part III last year, should I use the amount from Line 10b of my prior tax form instead of Line 19b?
For S corporation shareholders, when figuring Adjusted Basis (Line 6), must you separate basis if there is more than one activity?
Does 'since effective date' on Form 6198 mean since the filing date or the end of the prior tax year?
Workflow map
Related forms and next steps
Before
Current
After
Often used with
⚠ If something goes wrong
- Instructions for Form 8582 (for passive activity loss limitations when profit is from a passive activity)
- Instructions for Form 8810 (for corporate passive activity loss and credit limitations)
Questions about IRS Form 6198
What is IRS Form 6198 used for?
This form helps determine how much of a business or investment loss you can actually deduct on your taxes this year. It ensures that the amount of loss you claim is limited to the amount you have personally risked in that activity. You use it alongside other tax forms like Schedule C and Schedule D.
Who must file IRS Form 6198?
Individuals (including filers of Schedules C, E, and F), estates, trusts, and certain closely held C corporations described in section 465(a) (1)(B) must file Form 6198.
What information does IRS Form 6198 require?
The form collects information to figure the profit or loss from an at-risk activity for the current year (Part I), the amount at risk (Part II or Part III), and the final deductible loss for the current year (Part IV). Specific line items include Line 5 (current year loss) and Line 10b (Amount At Risk).
When is IRS Form 6198 due?
The instructions do not specify a filing deadline, but losses from earlier tax years must be included on Form 6198 before starting Part I.
How do I complete IRS Form 6198?
First, include any prior year losses that could not be deducted on your current return before starting Part I. Next, complete either Part II (Simplified Computation) or Part III (Detailed Computation) to determine the amount at risk. Finally, use the results from Parts I, II/III, and IV to establish the final deductible loss.
What happens if IRS Form 6198 is filed incorrectly?
If the at-risk rules are applied incorrectly, the amount of loss you can deduct may be limited to less than expected, as detailed by section 465.
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