a$.$Classify the following events as either an "Increase" or a "Decrease" in an investor's at$-$risk amount.

$1.$The amount of cash and the adjusted basis of property contributed to the activity.

IncreaseDecrease

$2.$Amounts borrowed for use in the activity for which the taxpayer is personally liable or has pledged as security property not used in the activity.

IncreaseDecrease

$3.$The amount of cash and the adjusted basis of property withdrawn from the activity $($i$.$e$.,$ withdrawals$).$

IncreaseDecrease

$4.$The taxpayer's share of amounts borrowed for use in an activity involving the holding of real property that is qualified nonrecourse financing that is secured by real property used in the activity.

IncreaseDecrease

$5.$The taxpayer's share of deductible losses from the activity.

IncreaseDecrease

$6.$The taxpayer's share of any reductions of debt for which recourse against the taxpayer exists, or reductions of qualified nonrecourse debt.

IncreaseDecrease

$7.$The taxpayer's share of the activity's income.

IncreaseDecrease

Question Content Area

b$.$Assume a taxpayer is facing disallowances because of at$-$risk limitations$.$ Indicate whether the taxpayer can employ any of the strategies listed below to increase the at$-$risk amount in order to claim a higher deduction for losses. Select either "Yes, can be used to increase amount" or $"$No$,$ it can't be used to increase amount".

$1.$Invest additional funds or property.

Yes, can be used to increase amountNo, it can't be used to increase amount

$2.$Increase recourse or qualified nonrecourse business debt.

Yes, can be used to increase amountNo, it can't be used to increase amount

$3.$Decrease recourse or qualified nonrecourse business debt.

Yes, can be used to increase amountNo, it can't be used to increase amount

$4.$Decrease his or her share of the activity's income.

Yes, can be used to increase amountNo, it can't be used to increase amount