Losses From Operating a Farm If your deductible farm expenses are more than your farm income,you have a loss from the operation of your farm. The amount of thatloss you can deduct when figuring your taxable income may be limited.To figure your deductible loss, you must apply the following limits. The at-risk limits. The passive activity limits. The following discussions explain these limits. If your deductible loss after applying these limits is more thanyour other income for the year, you may have a net operating loss. SeeNet Operating Losses, later. Caution: If you do not carry on your farming activity to make a profit, yourloss deduction may be limited by the not-for-profit rules. SeeNot-for-Profit Farming, later. At-Risk Limits The at-risk rules limit your deduction for losses from mostbusiness or income-producing activities, including farming. Theat-risk rules limit the losses you can deduct when figuring yourtaxable income. The deductible loss from an activity is limited to theamount you have at risk in the activity. You are at risk in any activity for: The money and adjusted basis of property you contribute tothe activity, and Amounts you borrow for use in the activity if: You are personally liable for repayment, or You pledge property (other than property used in theactivity) as security for the loan. Tolouse luxury hotelsYou are not at risk, however, for amounts you borrow for use in afarming activity from a person who has an interest in the activity(other than as a creditor) or a person related to someone (other thanyou) having such an interest. For more information, see Publication 925. Passive Activity Limits A passive activity Belgium Hotelsis generally any activity involvingthe conduct of any trade or business in which you do not materiallyparticipate. Generally, a rental activity is a passive activity. If you have a passive activity, special rules limit the loss youcan deduct in the tax year. You generally can deduct losses frompassive activities only from income from passive activities. Creditsare similarly limited. For more information, see Publication 925.