Form 6198 At Risk Limitation

[David]

W is the owner of a Schedule C business. H works in the business but was not paid. The business had $69K loss in 2015 and $94K loss in 2016 and the business was closed in 2016.

The W's father-in-law loaned her $207K to start the business, buy equipment, etc. There is no loan agreement with timing of payments, collateral, etc.

She is expected to pay back all of the loan.

In the instructions for Form 6198 a father-in-law is not listed as a related person. He also doesn't have an interest in the business and is a creditor only. There is no definition as to "have an interest in the business" so I'm not sure if the H is considered as having an interest in the business which would disqualify the father-in-law's loan as at risk.

Are the 2015 and 2016 losses considered at risk since the father-in-law still expects the loan to be paid?

Thanks for your help.

[Lynn EA USTCP in Louisiana]

Basically the $ was loaned from father-in-law to H & W.  W puts the $ into her business.  W is expected to repay the loan.  IMO (totally unresearched) W is at risk for the loan and thus at risk for form 6198 purposes.

[David]

Thanks, Lynn. So no need to file form 6198 since all is at risk?