7901 / Does the “at risk” limitation on losses apply to individual investors in an equipment leasing program? If so, what effect will it have?

In general, the “at risk” rules limit the deduction an investor may claim for the investor’s share of net losses generated by an equipment leasing program to the amount he or she has at risk in that program. The rules do not prohibit an investor from offsetting his or her share of the deductions generated by the program against the income received from that program. For a detailed explanation of the operation of the at risk limitation, see Q 8006 to Q 8009.

Put as simply as possible, an investor is initially “at risk” to the extent that the investor is not protected against the loss of money or other property he or she contributes to the program. For the specifics as to how an investor’s “amount at risk” is calculated, see Q 8005.