U.S Code last checked for updates: Nov 22, 2024
All TitlesTitle 26Subtitle AChapter 1Subchapter PPart IV
§ 1244.
Losses on small business stock
(a)
General rule
(b)
Maximum amount for any taxable year
For any taxable year the aggregate amount treated by the taxpayer by reason of this section as an ordinary loss shall not exceed—
(1)
$50,000, or
(2)
$100,000, in the case of a husband and wife filing a joint return for such year under section 6013.
(c)
Section 1244 stock defined
(1)
In general
For purposes of this section, the term “section 1244 stock” means stock in a domestic corporation if—
(A)
at the time such stock is issued, such corporation was a small business corporation,
(B)
such stock was issued by such corporation for money or other property (other than stock and securities), and
(C)
such corporation, during the period of its 5 most recent taxable years ending before the date the loss on such stock was sustained, derived more than 50 percent of its aggregate gross receipts from sources other than royalties, rents, dividends, interests, annuities, and sales or exchanges of stocks or securities.
(2)
Rules for application of paragraph (1)(C)
(A)
Period taken into account with respect to new corporations
For purposes of paragraph (1)(C), if the corporation has not been in existence for 5 taxable years ending before the date the loss on the stock was sustained, there shall be substituted for such 5-year period—
(i)
the period of the corporation’s taxable years ending before such date, or
(ii)
if the corporation has not been in existence for 1 taxable year ending before such date, the period such corporation has been in existence before such date.
(B)
Gross receipts from sales of securities
(C)
Nonapplication where deductions exceed gross income
(3)
Small business corporation defined
(A)
In general
(B)
Amount taken into account with respect to property
(d)
Special rules
(1)
Limitations on amount of ordinary loss
(A)
Contributions of property having basis in excess of value
If—
(i)
section 1244 stock was issued in exchange for property,
(ii)
the basis of such stock in the hands of the taxpayer is determined by reference to the basis in his hands of such property, and
(iii)
the adjusted basis (for determining loss) of such property immediately before the exchange exceeded its fair market value at such time,
then in computing the amount of the loss on such stock for purposes of this section the basis of such stock shall be reduced by an amount equal to the excess described in clause (iii).
(B)
Increases in basis
(2)
Recapitalizations, changes in name, etc.
(3)
Relationship to net operating loss deduction
(4)
Individual defined
(e)
Regulations
(Added Pub. L. 85–866, title II, § 202(b), Sept. 2, 1958, 72 Stat. 1676; amended Pub. L. 94–455, title XIX, §§ 1901(b)(1)(W), (3)(G), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1792, 1793, 1834; Pub. L. 95–600, title III, § 345(a)–(d), Nov. 6, 1978, 92 Stat. 2844, 2845; Pub. L. 98–369, div. A, title IV, § 481(a), July 18, 1984, 98 Stat. 847; Pub. L. 113–295, div. A, title II, § 221(a)(41)(H), Dec. 19, 2014, 128 Stat. 4044.)
cite as: 26 USC 1244
© 2014 CustomsMobile | Disclaimer | Privacy | About