[12tang]

Can someone explain these concepts? I feel that becker is just not explaining it well enough for me to understand. Why is it that if a shareholder gives a nonrecourse loan to the s corp, his/her at-risk doesn’t increase? Nonrecourse to the s corp means that the s corp is not liable?

Intuitively, I want to say that because the s corp is not liable, that would raise at risk for the shareholder. This obviously isn’t the case. Someone please?

Using Becker self-study
FAR: (82) 175 hours - 1st attempt
BEC: (XX)
AUD: (69) 45hrs of study - 1st attempt
REG: (XX)

[mitchmatch]

Definitely right, Becker does not do a good job with alot of topics in REG, but here's my understanding and how i got it and ill explain to the best of my ability, im sure others will follow and correct some of my logic. Non recourse does not get included into at risk, but does get calculated into the basis. I believe non recourse means the shareholder is not liable, but non the less its still gets calculated into the shareholders basis. I believe the whole point of this is to be able to calculate at risk basis which if increased then the shareholder can offset more of their losses, because losses are deducted up to at risk basis. Again im sure someone might come in and correct me, but this is how i understood it and it worked for me.

FAR-76 First attempt.
AUD-79 First attempt.
REG-79 First attempt.
BEC-79 First attempt.

Done!

BECKERS

[12tang]

Thanks. I'll have to dig into this a little more until I can get to the level of explaining it to myself. Did you use anything else to study for REG and if so, what?

Using Becker self-study
FAR: (82) 175 hours - 1st attempt
BEC: (XX)
AUD: (69) 45hrs of study - 1st attempt
REG: (XX)

[taxgeek83]

Try doing a quick Google search – I did one earlier today and meant to comment on your thread, but got caught up in work and didn't make it back here until now. There are quite a few articles out there dealing with this subject that might be helpful to you.

Sorry my response tonight isn't as detailed as you might be hoping for, but if you get to researching and have any other questions, feel free to ask! And if I can't answer your questions, hopefully someone else can jump in here. 🙂

[mitchmatch]

To give an example, lets say you have a basis of $50k and you have recourse loan of $10k and non recourse loan of $5k, so your total basis would be $65k, but your at risk basis would only be the $50k + the $5k recourse = $55k( for at risk basis we do not include non recourse loans). So now assume you had a loss of $60k, you would only be able to deduct up to the at risk basis of $55k. Though your overall basis at the beginning would have included everything which is $65k. So just to reiterate the goal of at risk basis is to see how much losses you can deduct. Hopefully that makes some sense.

FAR-76 First attempt.
AUD-79 First attempt.
REG-79 First attempt.
BEC-79 First attempt.

Done!

BECKERS

[12tang]

Thanks Mitch. That example helps. Come exam day, I'll be able to recall this. But of course, I most likely won't receive a question on it… LOL

Using Becker self-study
FAR: (82) 175 hours - 1st attempt
BEC: (XX)
AUD: (69) 45hrs of study - 1st attempt
REG: (XX)

[Anonymous]

@mitchmatch As per the basic idea you given for the at risk basis ,

(but your at risk basis would only be the $50k + the $5k recourse = $55k( for at risk basis we do not include non recourse loans). So now assume you had a loss of $60k, )
Does at the risk basis should be $50k + $10k=$60k.
Correct me ,if I am thinking wrong.

[mitchmatch]

Again i might be wrong, but i believe that at risk basis is the 50k plus the 5k of recourse loans. For at risk basis( to see how much loss you can deduct) its 55k, for the regular basis its 55k+5+10. Hopefully someone who knows this topic a little better can weigh in.

FAR-76 First attempt.
AUD-79 First attempt.
REG-79 First attempt.
BEC-79 First attempt.

Done!

BECKERS

[Author]

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