Business Loss

How did you answer the question about your investment being at risk?

Please see this information from NancyG.

At risk means you are using your own money (or borrowed funds if personally liable) for the business. 

A loss may only be deducted up to the amount you personally have at risk, and no more. If a loss exceeds your at-risk investment, the excess is called a suspended loss and may be deducted in a future year, indefinitely, until you have sufficient at-risk basis to absorb the loss.

Amounts invested in the business for which you would NOT be at risk may include the following:

• Non-recourse loans used to finance the business
• Cash, property or borrowed amounts used in the business that are protected against loss by a guarantee, stop-loss agreement, or other similar arrangement (excluding casualty insurance and insurance against tort liability).
• Amounts borrowed for use in the business from a person who has an interest in the business, other than as a creditor.

In other words, if you have absolutely no money at risk in your business, you may not deduct any part of a Schedule C loss. The amount of a loss you may deduct must be equal to or less than the amount you personally stand to lose.