J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

10.19 Amounts Not At Risk

The following may not be treated as part of basis for at-risk purposes in determining your tax position in a business or investment:

Liabilities for which you have no personal liability, except in the case of certain real estate financing (10.18).

Liabilities for which you have personal liability, but the lender also has a capital or profit-sharing interest in the venture; but see the exception in 10.18.

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Caution

Lender Has Interest

Even if you are personally liable for a debt, you may not be considered at risk if the lender has an interest in the activity other than as a creditor (10.18).

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Recourse liabilities convertible to a nonrecourse basis.

Money borrowed from a relative listed in 5.6 who has an interest in the venture, other than as a creditor, or from a partnership in which you own more than a 10% interest.

Funds borrowed from a person whose recourse is solely your interest in the activity or property used in the activity.

Amounts for which your economic loss is limited by a nonrecourse financing guarantee, stop-loss agreement, or other similar arrangement.

Investments protected by insurance or loss reimbursement agreement between you and another person. If you are personally liable on a mortgage but you separately obtain insurance to compensate you for any mortgage payments, you are at risk only ...