Enter this amount only if it was included on line 6. Exploring for or exploiting geothermal deposits, as defined in section 613(e)(2). I've entered all the 1065 K-1 information, but I don't see my excess distribution reflected anywhere. However, this does not apply to (i) amounts borrowed by a corporation from a person whose only interest in the activity is as a shareholder of the corporation, or (ii) amounts borrowed after May 3, 2004, and secured by real property used in the activity of holding real property (other than mineral property) that, if nonrecourse, would be qualified nonrecourse financing. List each subsequent year in order. Enter these amounts only if they were included on line 11 and not included under (1) or (2) above. This section is effective for any financing incurred on or after August 4, 1998, but taxpayers can apply the section retroactively. (c)(7)(B). As a general rule, percentage depletion deductions claimed in excess of the basis of the depletable property constitute an item of tax preference in determining the AMT. T4 Percentage Depletion in Excess of Basis. (c)(3)(B). L. 109432, div. (d)(1). Amendment by section 202(d)(1) of Pub. Separately stated loss items (Boxes 2 to 12 (A to P. & S and 14)L&M)) 3. 29, 1975, 89 Stat. 2010Subsec. 2942, provided that: Amendment by Pub. L. 98369, div. L. 11597 applicable to taxable years beginning after Dec. 31, 2017, except as provided by transition rule, see section 13305(c) of Pub. Withdrawals and distributions during the tax year both cash and the adjusted basis of noncash items (less nonrecourse liabilities to which the noncash items are subject) including assets used in the activity to repay certain debts. When a shareholder or partner takes all the basis out and then some, the excess is a taxable capital gainoften an unwelcome surprise to shareholders accustomed to receiving distributions tax-free. Percentage depletion of oil and gas properties in excess of the taxpayer's adjusted basis at year end. (B) and redesignated former subpars. For example, if a property produces and sells $1 million worth of oil a year, your formula would be 15 percent multiplied by $1,000,000, which equals $150,000. Subsec. For example, if 2020 is the current year, and your 2019 Schedule C (Form 1040 or 1040-SR) had a $1,500 loss on line 31, but because of the at-risk rules your loss was limited to $500, include the $1,000 on your 2020 Schedule C (Form 1040 or 1040-SR) in Part V, Other Expenses, and identify it as a prior year loss. Subsec. It can be used only if you know your adjusted basis in the activity or in your interest in the partnership's or S corporation's at-risk activity. An organization specifically required to be taxed as a corporation by the Internal Revenue Code (for example, certain publicly traded partnerships). (i) and (ii). If you are not an S corporation shareholder, enter the total net income from the activity since the effective date, taking into account only those years the activity had net income. Tax preference items include private-activity municipal-bond interest . Include all distributions you received from the activity as well as your share of the activity's taxable income. Nonrecourse liabilities of property you contributed to the activity since the effective date. (c)(6)(H). In every case, depletion can't reduce the property's basis to less than zero. Subsec. To determine the allowable portion of each deduction or loss, divide each deduction or loss from the activity by the total loss from the activity on line 5. These amounts, casualty or theft gains and losses, and investment interest expense are entered on lines 2a, 2b, 2c, and 4. Each partner shall separately keep records of his share of the adjusted basis in each oil and gas property of the partnership, adjust such share of the adjusted basis for any depletion taken on such property, and use such adjusted basis each year in the computation of his cost depletion or in the computation of his gain or loss on the disposition of such property by the partnership. For purposes of paragraph (1), the depletable natural gas quantity of any taxpayer for any taxable year shall be equal to 6,000 cubic feet multiplied by the number of barrels of the taxpayers depletable oil quantity to which the taxpayer elects to have this paragraph apply. Farming, as defined in Amendment by section 13305(b)(5) of Pub. (vi). line 20, subject to any other limitations. Pub. This can be cost one year and percentage the next. If you are not an S corporation shareholder, also include liens and encumbrances on property you contributed to the activity that are included on line 11. From the IRS Part 4. L. 11597 applicable to taxable years beginning after Dec. 31, 2017, see section 11011(e) of Pub. L. 109432, div. L. 96603 added par. (b)(1)(C). Generally, gain on the sale or disposition of property on which percentage depletion has exceeded the basis is limited to the selling price. It is calculated by applying a 15 percent reduction to the taxable gross income of a productive well's property. 1366(d)(1) and 704(d)(1)). Percentage depletion may be deducted even after the total depletion deductions have exceeded the cost basis. 1999Subsec. Cash, property, or borrowed amounts protected against loss by a guarantee, stop-loss agreement, or other similar arrangement entered into since the effective date. L. 9412, title V, 501(c), Mar. Do not include items covered by casualty insurance or insurance against tort liability. (c)(7)(E). The Subchapter S Revision Act of 1982, referred to in subsec. The quantity limitation, the 65 percent limitation and the excess IDC preference amount are calculated for all oil and gas . Page Last Reviewed or Updated: 13-Jan-2020, Request for Taxpayer Identification Number (TIN) and Certification, Employers engaged in a trade or business who pay compensation, All section 1245 properties that are leased or held for lease and placed in service in any tax year of a partnership or an S corporation are treated as one activity. Generally, the net FMV is determined when the property is pledged as security for a loan. The S corporation shall allocate to each shareholder his pro rata share of the adjusted basis of the S corporation in each oil or gas property held by the S corporation. section 464(e)(1). Amendment by Pub. For provisions that nothing in amendment by section 11815(a) of Pub. Pub. . Sec. L. 107147, title VI, 607(b), Mar. Percentage depletion in excess of the 65 percent limit may be carried over to (c)(7)(A), (B). (c)(5). A, title I, 118(b), Pub. 3513, as amended by Pub. Your answer, I and II., was incorrect. 1986Subsec. Pub. Subsec. Amendment by section 11011(d)(4) of Pub. If you have investment interest expense from other activities on L. 94455, 2115(c)(1), inserted provision relating to the method to be employed by the partners in computing the depletion allowance. Explanation: Among the options provided, only the percentage depletion in excess of a property . L. 10958, 1322(a)(3)(B), substituted section 45K(d)(2)(C) for section 29(d)(2)(C) in concluding provisions. Taxpayers other than partners or S corporation shareholders. Percentage depletion is 15% of gross income, and it can exceed basis. A closely held corporation must apply the limitation on the deduction for interest expense under section 163(j) before applying the at-risk limitations. Non-dividend distributions (Box 16(D)) L. 104188 struck out the table contained in before subparagraph (B). After the description of the activity, if applicable, enter the name and identifying number of the partnership or S corporation. Then, multiply the total income and gains by this fraction. Ultra-tax just cannot handle this. (c)(9)(A). Pub. with respect to an estate or trust, 5 percent or more of the beneficial interests in such estate or trust. 1984Subsec. (C) to (F) as (B) to (E), respectively, and struck out former subpar. See Pub. L. 109135 added subpar. (ii) and struck out former cl. If you have a loss or a deduction from an earlier tax year that you could not deduct because of the at-risk rules, these losses and deductions must be included in the current year amounts you enter in Generally, the net FMV is determined when the property is pledged as security for the loan. L. 101508, 11815(a)(1)(C), struck out par. Enter here and on Form 6198, line 11. Do not enter amounts included in (2) above. L. 99514 applicable to amounts received or accrued after Aug. 16, 1986, in taxable years ending after such date, see section 412(a)(3) of Pub. For example, the amount described in 1.57-1(h) (relating to excess of percentage depletion over basis) is that portion of the deduction allowable for depletion under section 611 which is equal to the amount determined under 1.57-1(h). Excess depletion (Box 17(R)) 1. For a taxpayer to claim a deduction for a loss from a relevant passthrough entity, the taxpayer must have basis in the entity. Taxpayers other than partners or Subsec. L. 94455, title XXI, 2115(f), Oct. 4, 1976, 90 Stat. See Pub. Notwithstanding the preceding sentence this paragraph shall not apply in any case where the combined gross receipts from the sale of such oil. Amendment by section 1322(a)(3)(B) of Pub. The estimated burden for all other taxpayers who file this form is shown below. Pub. L. 97448 applicable to transfers in taxable years ending after Dec. 31, 1974, but only for purposes of applying this section to periods after Dec. 31, 1979, and amendment by section 202(d)(2) of Pub. To figure the adjusted basis, see the Instructions for Form 1120-S. For purposes of this subsection, persons who are members of the same controlled group of corporations shall be treated as one taxpayer. Pub. If the taxpayer or one or more related persons engages in the refining of crude oil, subsection (c) shall not apply to the taxpayer for a taxable year if the average daily refinery runs of the taxpayer and such persons for the taxable year exceed 75,000 barrels. Percentage depletion deducted in excess of the adjusted basis of the depletable property for the activity since the effective date. A person related to you unless the person would be a qualified person but for the relationship and the nonrecourse financing is commercially reasonable and on the same terms as loans to unrelated persons, The seller of the property (or a person related to the seller), or. L. 9530 applicable to taxable years beginning after Dec. 31, 1976, see section 106(a) of Pub. The reduction is determined on a property-by property basis and is limited to the taxpayer's first 1,000 barrels of oil (or 6,000 mcf of natural . The tax treatment of depletion allowed in excess of the basis of a property sold is explained in by Rev. What is excess percentage depletion over cost depletion and as it a permanent or temporary tax difference? excess intangible drilling costs (wages, fuel, repairs). The basis limits are the first of three limitations that are applied to Schedule K-1 losses and deductions. 60, provided that: Pub. (c)(6)(A)(i). Enter gains and losses without regard to the at-risk limitations, the limitation on capital losses, or the passive activity loss limitations. Cash and the adjusted basis of other property (determined at the time of the contribution) contributed to the activity during the tax year. Use the Line 11 Worksheet and its instructions to figure your investment in the activity at the effective date. Any other activity that is not included in (1) through (5) above. Include changes during the current tax year in amounts that increase your amount at risk, such as the following. Jill has a Schedule C (Form 1040 or 1040-SR) loss of $4,600 on line 1 and a Schedule D (Form 1040 or 1040-SR) gain of $3,100 on line 2a. If the partnership or (4) generally. Pub. The son's cost basis on the stock is $3,000. in the case of a trust, any distributions to its beneficiary, except in the case of any trust where any beneficiary of such trust is a member of the family (as defined in section 267(c)(4)) of a settlor who created inter vivos and testamentary trusts for members of the family and such settlor died within the last six days of the fifth month in 1970, and the law in the jurisdiction in which such trust was created requires all or a portion of the gross or net proceeds of any royalty or other interest in oil, gas, or other mineral representing any percentage depletion allowance to be allocated to the principal of the trust. In the Cost Depletion section, $60,000 is entered in both the Leasehold cost or other basis and Accumulated depletion fields so there will be no cost depletion for Well #1. The input through the O&G screen is exactly the same as on the 1040. (c)(3)(A)(i). (9) and (10). If you are an S corporation shareholder and you contributed property to the corporation subject to a liability, including a liability you are personally required to repay, then you must reduce the total of the adjusted basis of all the property you contributed by the total of all liabilities the property was subject to. Amounts borrowed from a person who has an interest in the activity other than as a creditor or who is related under section 465(b)(3)(C) to a person (except you) having such an interest. (B) and (C) by substituting determined under paragraph (3)(B) for determined under the table contained in paragraph (3)(B), was executed by making the substitution for determined under the table in paragraph (3)(B) as the probable intent of Congress. Section 503 of the Natural Gas Policy Act of 1978, referred to in subsec. L. 95618, title IV, 403(d), Nov. 9, 1978, 92 Stat. The allocation is to be made as of the later of the date of acquisition of the oil or gas property by the partnership, or January 1, 1975. Pub. Pub. See Partnership Distributions on Page 16-13. Each partner must determine the allowable amount to report on the partner's return. 925, Passive Activity and At-Risk Rules. Pub. (1). L. 109432 substituted 2008 for 2006. If you completed Part III of Form 6198 for your prior tax year, check box b and enter on this line any increases described in (1) through (9) below that occurred since the end of your prior tax year. It is also capped at the net income of a well . Include on lines 2a, 2b, and 2c your current year gains and losses and prior year losses attributable to the activity that you could not deduct because of the at-risk rules. 1980Subsec. 23, 2018, see section 401(e) of Pub. Amendment by section 1901(a)(86) of Pub. (a) If line 5 is a loss of $400 and line 20 is $1,000, enter ($400) on line 21. Include amounts that were withdrawn and recontributed. Pub. Pub. Holding mineral property may be subject to at-risk limitations other than the special rules that apply to activities of holding real property. Cost depletion cannot exceed the property's basis, while the use of percentage depletion is limited to the revenue from production of 1,000 barrels a day. adjusted basis of the property). You are required to give us the information. See Pub. L. 101508, 11523(b)(1), added cl. L. 101508 applicable to taxable years beginning after Dec. 31, 1990, see section 11522(c) of Pub. A qualified person is a person who actively and regularly engages in the business of lending money (for example, a bank or savings and loan association). Pub. Under the current IRC, taxpayers with costs subject to recovery by depletion must calculate both cost depletion under 611 and percentage depletion under 613 (or 613A in the case of oil and gas wells) and deduct the higher of the two amounts calculated on a property-by-property basis. (c)(7)(E). Subsec. However, percentage depletion is limited to 50% (100% for oil and gas properties) of taxable income from the property (computed without allowance for depletion). 925. (B) to (D) as (C) to (E), respectively. If the amount on line 21 is made up of more than one deduction or loss item in Part I (such as a Schedule C loss and a Schedule D loss), a portion of each such deduction or loss item is allowed (subject to other limitations) for the year. 2005Subsec. (e) Partnerships. Cash, property, or borrowed amounts used in the activity that are protected against loss by a guarantee, stop-loss agreement, or other similar arrangement (excluding casualty insurance and insurance against tort liability). 541, Partnerships. Pub. qualified natural gas from geopressured brine, qualified natural gas from geopressured brine, Pub. Enter your ordinary income or loss from the at-risk activity without regard to the at-risk limitations. In most situations, the basis of an asset is its cost to you. with respect to any corporation, 5 percent or more in value of the outstanding stock of such corporation, with respect to a partnership, 5 percent or more interest in the profits or capital of such partnership, and. Do not accumulate totals of earlier losses or nonrecourse debts. Pub. Pub. If you completed Part III of Form 6198 for the prior tax year, check box b and enter the amount from line 19b of the prior year form on this line. L. 98369, set out as a note under section 704 of this title. For more details, see Pub. How is percentage depletion deduction calculated? section 1245(a)(3). (c)(1). May be returned to the depreciation bases of the related assets and claimed as depreciation over the useful . Then, see the instructions for lines 15 and 16, and the instructions for line 18, later, to determine the amounts to enter on those lines. Add lines 1, 2, 4, 6, 7, and 8. If the taxpayers average daily production of domestic natural gas exceeds his depletable natural gas quantity, the allowance under paragraph (1)(B) with respect to natural gas produced during the taxable year from each property in the United States shall be that amount which bears the same ratio to the amount of depletion which would have been allowable under section 613(a) for all of the taxpayers natural gas produced from such property during the taxable year (computed as if section 613 applied to all of such production at the rate specified in paragraph (1) or (6), as the case may be) as the amount of his depletable natural gas quantity in cubic feet bears to the aggregate number of cubic feet representing the average daily production of domestic natural gas of the taxpayer for such year. Pub. L. 95618 effective on Oct. 1, 1978, and applicable to taxable years ending on or after such date, see section 403(c) of Pub. Subsec. (6) generally, providing for an increase in percentage depletion allowance for marginal production, and substituting provisions relating to oil and gas produced from marginal properties for former provisions which related to oil and gas resulting from secondary or tertiary processes. Of the $500 loss for 1975, only $200 is a loss for which there was an equal or greater amount not at risk at year end. L. 94455, 1901(a)(86)(B), substituted determined without for determined with. (d)(1). Percentage depletion based upon 15% would equal a deduction of $7,500. L. 101508, title XI, 11523(c), Nov. 5, 1990, 104 Stat. 551, Basis of Assets, for rules on adjusted basis. L. 101508, title XI, 11521(c), Nov. 5, 1990, 104 Stat. 2 It prohibits percentage depletion to the extent it exceeds the net income from a particular property. (c)(10). A, title I, 118(a), Pub. A partner in a partnership or an S corporation shareholder can aggregate and treat as a single activity all of the properties of that partnership or S corporation that are included within each of categories (1), (2), (4), and (5) under At-Risk Activities, earlier. See Pub. Regs. Pub. Such election shall be made at such time and in such manner as the Secretary shall by regulations prescribe. Enter here and on Form 6198, line 11. Net fair market value (FMV) of property you own (not used in the activity) that secures nonrecourse loans used to finance the activity, to acquire property used in the activity, or to acquire your interest in the activity. L. 10160, 3(b)(5), July 26, 1989, 103 Stat. His taxable income from all sources is $432,000, and 65 . Pub. Pub. L. 94455, 1901(a)(86)(A), struck out within the meaning of section 613(b)(1)(A) after determined to be a gas well. If an amount is disallowed as a deduction for the taxable year by reason of application of the preceding sentence, the disallowed amount shall be treated as an amount allowable as a deduction under subsection (c) for the following taxable year, subject to the application of the preceding sentence to such taxable year. 159, effective Jan. 1, 1993. B's initial tax basis capital account is $10 ($30 adjusted tax basis of property contributed, less the $20 liability to which the property was subject). Subtract line 10b from line 10a, Accrual basis taxpayer investment in the activity at the effective date. In the case of individuals who are members of the same family, the tentative quantity determined under paragraph (3)(B) shall be allocated among such individuals in proportion to the respective production of domestic crude oil during the period in question by such individuals. L. 115141, 401(a)(136), substituted taxpayers natural gas for taxpayers natural gas. The first loss limitation that must be considered is that of basis. See Pub. L. 99514, set out as a note under section 613 of this title. Pub. In applying this subsection, there shall not be taken into account the production of natural gas with respect to which subsection (b) applies. Sec. percentage depletion Feature. If you are a partner or an S corporation shareholder, enter any items for the activity that are from your investment in the activity or were passed through to you on Schedule K-1 or a similar statement. Pub. For purposes of basis adjustments and determining whether cost depletion exceeds percentage depletion with respect to the production from a, through any retail outlet operated by the taxpayer or a related person, or, obligated under an agreement or contract with the taxpayer or a related person to use a trademark, trade name, or service mark or name owned by such taxpayer or a related person, in marketing or distributing oil or. 551 for details. However, under the cost depletion method, at an assumed rate of 10 percent, the allowance with respect to T's one-third interest which has a basis to him of $100,000 ($5,000, plus its basis adjustment of $95,000) is $10,000, although the cost depletion allowance with respect to the one-third interest of A and B in the coal property, each of . Percentage Depletion in Excess of Cost Depletion - Royalty Interests: 20T6: 0 : Percentage Depletion in Excess of Basis: 20T7: 0 : Net Equivalent Barrels: 20T8: 0 : Unrelated Business Taxable Income or Loss: 20V: 0 : Section 199A Publicly Traded Partnership (PTP) Income: 20Z1: (d)(2). Be sure to include the amount for the current year. L. 101508, 11521(a), redesignated par. If you are an S corporation shareholder, enter the loans you made to your S corporation since the effective date. Percentage depletion deducted in excess of the adjusted basis of the depletable property for the activity since the effective date. Pub. 1982Subsec. Pub. Enter this amount only if it was included on line 11. 9, 2002, 116 Stat. 2.204 Excess Natural Resource Depletion Allowance. 925 for definitions. When comparing lines 5 and 20, treat the loss on line 5 as a positive number only for purposes of determining the amount to enter on line 21. The remaining portion of each deduction or loss item from the activity is disallowed and must be carried over to next year. L. 101508, 11522(b)(1), substituted taxable income for 50-percent before limitation. L. 98369, 25(b)(3), inserted at end This subparagraph shall not apply after December 31, 1983.. The allowance for depletion under section 611 shall be computed in accordance with section 613 with respect to any qualified natural gas from geopressured brine, and 10 percent shall be deemed to be specified in subsection (b) of section 613 for purposes of subsection (a) of such section. Adjusted basis is the basis that would be used to figure the loss if the property was sold immediately after you contributed it to the activity. 703 Basis of Assets. Enter your share of amounts such as the following. Be sure to include the amount for the current year. If you carry a loss from Form 4684 to Schedule A (Form 1040 or 1040-SR), enter on line 2c either the loss from Schedule A (Form 1040 or 1040-SR) or the loss from Form 4684. Cash, property, or borrowed amounts, protected against loss by a guarantee, stop-loss agreement, or other similar arrangement outstanding at the effective date. A landowner calculates the cost depletion deduction as follows: Step 1: Divide the property's basis for depletion by the total recoverable units, which results in a rate per unit. Pub. -percentage depletion in excess of basis. L. 11597, 11011(d)(4), added subpar. Pub. The taxpayers depletable oil quantity for any taxable year shall be reduced by the number of barrels with respect to which an election under this paragraph applies. Amounts borrowed since the effective date from a person who has an interest in the activity other than as a creditor or who is related under section 465(b)(3)(C) to a person (except you) having such an interest. If you completed Part III of your prior year tax form, "since effective date" means since the end of your prior tax year. 925 for details. Pub. This does not apply to (a) amounts borrowed by a corporation from a person whose only interest in the activity is as a shareholder of the corporation, or (b) amounts borrowed after May 3, 2004, and secured by real property used in the activity of holding real property (other than mineral property) that, if nonrecourse, would be qualified nonrecourse financing. A person who receives a fee as a result of your investment in the property (or a person related to that person). For purposes of this paragraph, the term heavy oil means domestic crude oil produced from any property if such crude oil had a weighted average gravity of 20 degrees API or less (corrected to 60 degrees Fahrenheit). The time needed to complete and file this form will vary depending on individual circumstances. 925 for definitions and more details. L. 101508 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Nov. 5, 1990, for purposes of determining liability for tax for periods ending after Nov. 5, 1990, see section 11821(b) of Pub. Form 4952, determine the allowable investment interest deduction attributable to the at-risk activity included on line 8 of Form 4952, and enter that amount on line 4 of L. 104188 effective, except as otherwise expressly provided, as if included in the provision of the Revenue Reconciliation Act of 1990, Pub. Follow the instructions for your tax return. If the amount on this line is smaller than your overall loss from the activity (line 5), you may want to complete Part III to see if Part III gives you a larger amount at risk. Enter the form number or schedule letter to the left of the entry space for line 2c. (4) Examples. Subsec. Follow the instructions for your tax return to determine where to report the amount on your return. Subsec. Any other at-risk amounts included on line 15 that changed to amounts that are not at risk since the effective date. (1) General rule. If the royalty trust is sold at a gain, past depletion deductions which reduced adjusted cost basis must be recaptured as ordinary income. Ordinary loss (Box 1) 2. (9) by substituting determined under paragraph (3)(B) for determined under the table contained in paragraph (3)(B), could not be executed because that phrase did not appear after execution of amendment by Pub. (d) Production in excess of depletable quantity. The partnership shall allocate to each partner his proportionate share of the adjusted basis of each partnership oil or gas property. Subsec. Rusty computes his percentage depletion deduction by multiplying his $50,000 gross income from the oil/gas property by 15%, which is $7,500. Form 6198 is filed by individuals (including filers of Schedules C, E, and F (Form 1040 or 1040-SR)), estates, trusts, and certain closely held C corporations described in section 465(a)(1)(B), as modified by section 465(a)(3). See Pub. Percentage depletion in excess of property's adjusted basis: 9,000; Dividends from publicly held companies: 10,000; What is the amount of West's AMT tax preference items? (d)(4). Except as otherwise provided in this section, the allowance for depletion under section 611 with respect to any oil or gas well shall be computed without regard to section 613. Do not include notes that you have given to the activity that are still outstanding. Price increases after February 1, 1975, shall be presumed to take increases in tax liabilities into account unless the taxpayer demonstrates the contrary by clear and convincing evidence. requires percentage depletion to be calculated on a property-by-property basis. L. 101508, 11521(a), redesignated par. If you completed Part III of your prior year form, "since effective date" means since the end of your prior tax year. Subsec. Does percentage depletion reduce partnership basis? Don't forget to make an entry for AMT depletion (same as regular tax unless indicated otherwise). 925. See Pub. Subsec. Each shareholder shall separately keep records of his share of the adjusted basis in each oil and gas property of the S corporation, adjust such share of the adjusted basis for any depletion taken on such property, and use such adjusted basis each year in the computation of his cost depletion or in the computation of his gain or loss on the disposition of such property by the S corporation. Click on required statement. Jill completes Part II or Part III of Form 6198 and determines that only $600 of the $1,500 excess loss on line 5 is deductible in the current year. If you are not an S corporation shareholder, reduce the adjusted basis of property withdrawn by the amount, at the time of withdrawal, of any nonrecourse liability to which the property is subject. Enter the part that is allocable to the at-risk activity on line 11.