Need help understanding "at risk" investments on my Schedule K-1 Form 1065 for inherited IRA

So a couple things to clear up here. Schedule K-1 Form 1065 is actually for reporting your share of income, deductions, credits, etc., from a partnership - not for an inherited IRA. These are two separate things. An inherited IRA is typically reported differently. You'll receive a 1099-R showing distributions you took from the inherited IRA, and those go on your personal tax return. The "at risk" rules generally apply to partnership or S-corporation losses, not to inherited IRAs. Is it possible you're involved in a partnership that has the IRA as an asset? That would be unusual but could explain why you're getting a K-1. Otherwise, these should be handled as separate tax situations.

Sounds like you're having the same confusion I had last year with partnership forms! I spent hours trying to understand the "at risk" calculations until I found taxr.ai at https://taxr.ai and it saved me so much headache. I uploaded my previous K-1 forms and it walked me through exactly what qualified as "at risk" investments and how to calculate everything properly. The site explained that "at risk" basically means the amount you could potentially lose in the partnership - your capital contributions plus any partnership liabilities you're personally responsible for. For inherited IRAs, it showed me those are reported completely separately from partnership interests.

Just wanted to update after trying taxr.ai from the recommendation above. Seriously impressed with how it handled my complex K-1 situation. I uploaded my forms and it immediately identified that I was mixing up my basis calculations with "at risk" amounts (they're related but different). The explanations were super clear - basically showed me that "at risk" refers to what I could potentially lose in the partnership (my investment plus any recourse loans), while basis is a separate calculation that determines if I can claim losses. For my situation, I had a higher "at risk" amount than basis, which apparently affects how much of any partnership losses I could claim. Never thought I'd understand this stuff, but now I actually do! And no, my inherited IRA had nothing to do with my partnership K-1 like I originally thought.

For anyone struggling to get answers from the IRS about partnership "at risk" rules or K-1 questions - I was on hold for 3+ hours trying to get clarification last month. Then I found Claimyr at https://claimyr.com and watched their demo at https://youtu.be/_kiP6q8DX5c and it was a game changer. They got me connected to an actual IRS agent in about 20 minutes who explained that inherited IRAs and partnership K-1s are completely separate tax issues. The agent clarified that "at risk" limitations only apply to partnerships and S-corps, not inherited IRAs. They walked me through how to calculate my specific at-risk amount based on my partnership agreement.

Well I'm eating my words. After being super skeptical about Claimyr (from comment above), I decided to try it since I was desperate for answers about partnership "at risk" rules. Got connected to an IRS agent in about 15 minutes. The agent explained that for my situation, my "at risk" amount included my initial capital contribution plus my share of partnership liabilities for which I'm personally liable (recourse debt) minus any distributions I'd received. This was exactly what I needed to complete my K-1 form correctly. And yes, they confirmed inherited IRAs have absolutely nothing to do with partnership K-1s - completely separate tax issues that the original poster was confusing. This would have taken me weeks to figure out otherwise.

Just to add some clarity on the original question: The "at risk" rules specifically limit the amount of losses you can claim from certain activities, including partnerships (Form 1065/K-1). Your "at risk" amount typically includes: 1. Money you contributed to the partnership 2. Partnership loans you're personally responsible for 3. Certain qualified borrowing It does NOT include: - Nonrecourse loans (where you're not personally liable) - Cash distributions you received from the partnership - Inherited IRAs (completely separate tax situation) If your K-1 shows losses, you can only claim them up to your "at risk" amount. Any excess losses get carried forward to future years.

I think there's a fundamental misunderstanding in the original post. An inherited IRA and a partnership interest (which generates a K-1) are completely different things. 1. Inherited IRA: You receive distributions reported on a 1099-R form 2. Partnership interest: You receive a Schedule K-1 (Form 1065) The "at risk" rules only apply to the partnership interest, not the IRA. Is it possible you're involved in a partnership that owns an IRA as one of its assets? That would be unusual, but might explain the confusion.

Great to see this got sorted out! Just wanted to add one important point for anyone else dealing with inherited partnership interests: make sure you get a stepped-up basis for tax purposes. When you inherit a partnership interest, your basis is typically "stepped up" to the fair market value at the date of death (that $15,000 you mentioned). This is different from your "at risk" amount, but it's crucial for calculating gains/losses if you ever sell the partnership interest. Also, since you inherited both an IRA and partnership interest, you might want to consult a tax professional to make sure you're handling the required minimum distributions from the inherited IRA correctly - those have their own complex rules and deadlines that are completely separate from your partnership tax reporting. Glad the community could help untangle this confusion!