Sherri owns an interest in a business that is not a passive activity and in which she has $20,000 at risk. If the business incurs a loss from operations during the year and her share of the loss is $32,000, this loss will be fully deductible

a. True
b. False
Indicate whether the statement is true or false

False
RATIONALE: The at-risk provisions limit the deductibility of losses from business and income-producing activities for individuals and closely held corporations. The loss reduces Sherri's at-risk amount to $0 and results in a suspended loss of $12,000 under the at-risk rules.