Choice "b" is correct. Any losses in excess of the at-risk amount are suspended and carried forward without expiration and are deductible against income in future years from that activity. The at-risk amount is also referred to as basis. Note that although we discuss this in the textbook for partnerships, the concept applies to all activities that have flow through income and losses.

Choice "a" is incorrect. This is the rule for suspended passive activity losses, not suspended losses due to at-risk limitations. Any losses in excess of the at-risk amount are suspended and carried forward without expiration and are deductible against income in future years from that activity.

Choice "c" is incorrect. Losses in excess of the at-risk amount may not be deducted currently against income from other activities. Any losses in excess of the at-risk amount are suspended and carried forward without expiration and are deductible against income in future years from that activity.

Choice "d" is incorrect. Losses in excess of the at-risk amount are not carried back two years against activities with income and then carried forward for 20 years. Any losses in excess of the at-risk amount are suspended and carried forward without expiration and are deductible against income in future years from that activity.