Business Glossary

exposed to the danger of loss. Investors in a limited partnership can claim tax deductions only if they can prove that there's a chance of never realizing any profit and of losing their investment as well. Deductions will be disallowed if the limited partners are not exposed to economic risk-if, for example, the general partner guarantees to return all capital to limited partners even if the business venture should lose money.

exposed to the danger of loss. Investors in a limited partnership can claim tax deductions only if they can prove that there is a chance they can lose money. Deductions will be disallowed if the limited partners are not exposed to economic risk-if, for example, the general partner guarantees to return all capital to limited partners even if the business venture should lose money. It generally applies to tax-sheltered investments, except real estate financed by qualified thirdparty debt.