Treasury Regulations · 26 CFR
§ 7.465-2. Determination of amount at risk.
Regulation text, no changes From the eCFR, current as of October 15, 2026. The eCFR is an authoritative but unofficial editorial compilation of the Code of Federal Regulations; the official text is the annual CFR on govinfo. Compare it with this section on ecfr.gov (external site) or the official annual CFR on govinfo (external site).
Regulation under 26 U.S.C. § 465
Cite as 26 CFR § 7.465-2
At a glance
Read from the text and its source citation. Not part of the regulation.
- Status
- In the current eCFR
- Issued
- August 22, 1977 by T.D. 7504
- Issued under
- 26 U.S.C. § 465
- Length
- 372 words · about 2 min to read
- Cross-references
- cites 1 Code section and 0 regulations; cited by 4
¶(a) Initial amount. The amount a taxpayer is at risk on the effective date with respect to an activity to which section 465 applies shall be determined in accordance with this section. The initial amount the taxpayer is at risk in the activity shall be the taxpayer's initial basis in the activity as modified by disregarding amounts described in section 465(b) (3) or (4) (relating generally to amounts protected against loss or borrowed from related persons).
¶(b) Succeeding adjustments. For each taxable year ending before the effective date, the initial amount at risk shall be increased and decreased by the items which increased and decreased the taxpayer's basis in the activity in that year as modified by disregarding the amounts described in section 465(b) (3) or (4).
¶(c) Application of losses and withdrawals.
¶(1) Losses described in section 465(d) which are incurred in taxable years beginning prior to January 1, 1976 and deducted in such taxable years, will be treated as reducing first that portion of the taxpayer's basis which is attributable to amounts not at risk. On the other hand, withdrawals made in taxable years beginning before January 1, 1976, will be treated as reducing the amount which the taxpayer is at risk.
¶(2) Therefore, if in a taxable year beginning prior to January 1, 1976 there is a loss described in section 465(d), it shall reduce the amount at risk only to the extent it exceeds the amount of the taxpayer's basis which is not at risk. For the purposes of this paragraph the taxpayer's basis which is not at risk is that portion of the taxpayer's basis in the activity (as of the close of the taxable year and prior to reduction for the loss) which is attributable to amounts described in section 465(b) (3) or (4).
¶(d) Amount at risk shall not be less than zero. If, after determining the amount described in paragraph (a), (b), and (c) of this section, the amount at risk (but for this paragraph) would be less than zero, the amount at risk on the effective date shall be zero.
[T.D. 7504, 42 FR 42197, Aug. 22, 1977]
Cross-references
Computed from the citations in the text of 26 CFR.
Code sections it cites
Cited by 4 other regulations
Amendment history
From the source citation at the end of the section, newest first. T.D. is a Treasury decision; FR is the Federal Register.
- Issued by T.D. 7504 (42 FR 42197)
Where it sits in 26 CFR
- Subchapter A Income tax
- Part 7 Temporary income tax regulations under the tax reform act of 1976
Nearby sections
- § 7.48-2 Election of forty-percent method of determining investment credit for movie and television films placed in service in a taxable year beginning before January 1, 1975.
- § 7.48-3 Election to apply the amendments made by sections 804 (a) and (b) of the Tax Reform Act of 1976 to property described in section 50(a) of the Code.
- § 7.57(d)-1 Election with respect to straight line recovery of intangibles.
- § 7.465-1 Amounts at risk with respect to activities begun prior to effective date; in general.
- § 7.465-2 Determination of amount at risk.
- § 7.465-3 Allocation of loss for different taxable years.
- § 7.465-4 Insufficient records.
- § 7.465-5 Examples.
- § 7.936-1 Qualified possession source investment income.