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26 U.S.C. § 1244 — Losses on small business stock
Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** In the case of an individual, a loss on section 1244 stock issued to such individual or to a partnership which would (but for this section) be treated as a loss from the sale or exchange of a capital asset shall, to the extent provided in this section, be treated as an ordinary loss.
**(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
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Source file: Laws/federal/codes/united-states-code/title-26/section-1244-losses-on-small-business-stock--f800f7f90d.md
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Source location: Title 26, Chapter 1, § 1244; chapter-001-normal-taxes-and-surtaxes.md
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**(a) General rule** In the case of an individual, a loss on section 1244 stock issued to such individual or to a partnership which would (but for this section) be treated as a loss from the sale or exchange of a capital asset shall, to the extent provided in this section, be treated as an ordinary loss.
**(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* — For purposes of paragraph (1)(C), gross receipts from the sales or exchanges of stock or securities shall be taken into account only to the extent of gains therefrom.
(C) *Nonapplication where deductions exceed gross income* — Paragraph (1)(C) shall not apply with respect to any corporation if, for the period taken into account for purposes of paragraph (1)(C), the amount of the deductions allowed by this chapter (other than by sections 172, 243, and 245) exceeds the amount of gross income.
(3) **Small business corporation defined**
(A) *In general* — For purposes of this section, a corporation shall be treated as a small business corporation if the aggregate amount of money and other property received by the corporation for stock, as a contribution to capital, and as paid-in surplus, does not exceed $1,000,000. The determination under the preceding sentence shall be made as of the time of the issuance of the stock in question but shall include amounts received for such stock and for all stock theretofore issued.
(B) *Amount taken into account with respect to property* — For purposes of subparagraph (A), the amount taken into account with respect to any property other than money shall be the amount equal to the adjusted basis to the corporation of such property for determining gain, reduced by any liability to which the property was subject or which was assumed by the corporation. The determination under the preceding sentence shall be made as of the time the property was received by the corporation.
**(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* — In computing the amount of the loss on stock for purposes of this section, any increase in the basis of such stock (through contributions to the capital of the corporation, or otherwise) shall be treated as allocable to stock which is not section 1244 stock.
(2) **Recapitalizations, changes in name, etc.** — To the extent provided in regulations prescribed by the Secretary, stock in a corporation, the basis of which (in the hands of a taxpayer) is determined in whole or in part by reference to the basis in his hands of stock in such corporation which meets the requirements of subsection (c)(1) (other than subparagraph (C) thereof), or which is received in a reorganization described in section 368(a)(1)(F) in exchange for stock which meets such requirements, shall be treated as meeting such requirements. For purposes of paragraphs (1)(C) and (3)(A) of subsection (c), a successor corporation in a reorganization described in section 368(a)(1)(F) shall be treated as the same corporation as its predecessor.
(3) **Relationship to net operating loss deduction** — For purposes of section 172 (relating to the net operating loss deduction), any amount of loss treated by reason of this section as an ordinary loss shall be treated as attributable to a trade or business of the taxpayer.
(4) **Individual defined** — For purposes of this section, the term “individual” does not include a trust or estate.
**(e) Regulations** The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section.
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Federal law — U.S. Code and appendices · legal_authorities
### Statutory Notes
Section, acts Aug. 16, 1954, ch. 736, 68A Stat. 72; Feb. 26, 1964, Pub. L. 88–272, title I, § 123(c), 78 Stat. 30, allowed to corporations as a deduction the amount received as interest on obligations of the United States or on obligations of corporations organized under Acts of Congress which are instrumentalities of the United States under certain conditions.
#### Effective Date of Repeal
Repeal effective for taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94–455, set out as an Effective Date of 1976 Amendment note under [section 2 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section2&num=0&edition=prelim).
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 242
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Deduction allowed** There shall be allowed as a deduction for the taxable year an amount equal to—
(1) in the case of a taxable year beginning before January 1, 2021, the aggregate of the net operating loss carryovers to such year, plus the net operating loss carrybacks to such year, and
(2) in the case of a taxable year beginning after December 31, 2020, the sum of—
(A) the aggregate amount of net operating losses arising in taxable years beginning before January 1, 2018, carried to such taxable year, plus
(B) the lesser of—
(i) the aggregate amount of net operating losses arising in taxable years beginning after December 31, 2017, carried to such taxable year, or
(ii) 80 percent of the excess (if any) of—
(I) taxable income computed without regard to the deductions under this section and sections 199A and 250, over
(II) the amount determined under subparagraph (A).
For purposes of this subtitle, the term “net operating loss deduction” means the deduction allowed by this subsection.
**(b) Net operating loss carrybacks and carryovers**
(1) **Years to which loss may be carried**
(A) *General rule* — A net operating loss for any taxable year—
(i) shall be a net operating loss carryback to the extent provided in subparagraphs (B), (C)(i), and (D), and
(ii) except as provided in subparagraph (C)(ii), shall be a net operating loss carryover—
(I) in the case of a net operating loss arising in a taxable year beginning before January 1, 2018, to each of the 20 taxable years following the taxable year of the loss, and
(II) in the case of a net operating loss arising in a taxable year beginning after December 31, 2017, to each taxable year following the taxable year of the loss.
(B) *Farming losses*
(i) *I
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 172
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Married individuals filing joint returns and surviving spouses** There is hereby imposed on the taxable income of—
(1) every married individual (as defined in section 7703) who makes a single return jointly with his spouse under section 6013, and
(2) every surviving spouse (as defined in section 2(a)),
a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $36,90015% of taxable income. Over $36,900 but not over $89,150$5,535, plus 28% of the excess over $36,900. Over $89,150 but not over $140,000$20,165, plus 31% of the excess over $89,150. Over $140,000 but not over $250,000$35,928.50, plus 36% of the excess over $140,000. Over $250,000$75,528.50, plus 39.6% of the excess over $250,000.
**(b) Heads of households** There is hereby imposed on the taxable income of every head of a household (as defined in section 2(b)) a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $29,60015% of taxable income. Over $29,600 but not over $76,400$4,440, plus 28% of the excess over $29,600. Over $76,400 but not over $127,500$17,544, plus 31% of the excess over $76,400. Over $127,500 but not over $250,000$33,385, plus 36% of the excess over $127,500. Over $250,000$77,485, plus 39.6% of the excess over $250,000.
**(c) Unmarried individuals (other than surviving spouses and heads of households)** There is hereby imposed on the taxable income of every individual (other than a surviving spouse as defined in section 2(a) or the head of a household as defined in section 2(b)) who is not a married individual (as defined in section 7703) a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $22,10015% of taxable income. Over $22,100 but not over $53,50
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 1
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Definition of surviving spouse**
(1) **In general** — For purposes of section 1, the term “surviving spouse” means a taxpayer—
(A) whose spouse died during either of his two taxable years immediately preceding the taxable year, and
(B) who maintains as his home a household which constitutes for the taxable year the principal place of abode (as a member of such household) of a dependent (i) who (within the meaning of section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof) is a son, stepson, daughter, or stepdaughter of the taxpayer, and (ii) with respect to whom the taxpayer is entitled to a deduction for the taxable year under section 151.
(2) **Limitations** — Notwithstanding paragraph (1), for purposes of section 1 a taxpayer shall not be considered to be a surviving spouse—
(A) if the taxpayer has remarried at any time before the close of the taxable year, or
(B) unless, for the taxpayer’s taxable year during which his spouse died, a joint return could have been made under the provisions of section 6013 (without regard to subsection (a)(3) thereof).
(3) **Special rule where deceased spouse was in missing status** — If an individual was in a missing status (within the meaning of section 6013(f)(3)) as a result of service in a combat zone (as determined for purposes of section 112) and if such individual remains in such status until the date referred to in subparagraph (A) or (B), then, for purposes of paragraph (1)(A), the date on which such individual died shall be treated as the earlier of the date determined under subparagraph (A) or the date determined under subparagraph (B):
(A) the date on which the determination is made under [section 556 of title 37](https://uscode.house.gov/view.xhtml?req=granuleid:
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 2
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Federal law — U.S. Code and appendices · legal_authorities
**(a) In general** In the case of a Native Corporation, there shall be allowed a deduction for any contributions made by such Native Corporation to a Settlement Trust (regardless of whether an election under section 646 is in effect for such Settlement Trust) for which the Native Corporation has made an annual election under subsection (e).
**(b) Amount of deduction** The amount of the deduction under subsection (a) shall be equal to—
(1) in the case of a cash contribution (regardless of the method of payment, including currency, coins, money order, or check), the amount of such contribution, or
(2) in the case of a contribution not described in paragraph (1), the lesser of—
(A) the Native Corporation’s adjusted basis in the property contributed, or
(B) the fair market value of the property contributed.
**(c) Limitation and carryover**
(1) **In general** — Subject to paragraph (2), the deduction allowed under subsection (a) for any taxable year shall not exceed the taxable income (as determined without regard to such deduction) of the Native Corporation for the taxable year in which the contribution was made.
(2) **Carryover** — If the aggregate amount of contributions described in subsection (a) for any taxable year exceeds the limitation under paragraph (1), such excess shall be treated as a contribution described in subsection (a) in each of the 15 succeeding years in order of time.
**(d) Definitions** For purposes of this section, the terms “Native Corporation” and “Settlement Trust” have the same meaning given such terms under section 646(h).
**(e) Manner of making election**
(1) **In general** — For each taxable year, a Native Corporation may elect to have this section apply for such taxable year on the income tax return or an amendment or supplemen
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 247
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Federal law — U.S. Code and appendices · legal_authorities
Page 2344
TITLE 26—INTERNAL REVENUE CODE
§ 1243
Editorial Notes
REFERENCES IN TEXT
The Small Business Investment Act of 1958, referred
to in cl. (1), is Pub. L. 85–699, Aug. 21, 1958, 72 Stat. 689,
which is classified principally to chapter 14B (§ 661 et
seq.) of Title 15, Commerce and Trade. For complete
classification of this Act to the Code, see Short Title
note set out under section 661 of Title 15 and Tables.
AMENDMENTS
1976—Pub. L. 94–455 substituted ‘‘an ordinary loss’’ for
‘‘a loss from the sale or exchange of property which is
not a capital asset’’, each time appearing.
Statutory Notes and Related Subsidiaries
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by Pub. L. 94–455 applicable with respect
to taxable years beginning after Dec. 31, 1976, see sec-
tion 1901(d) of Pub. L. 94–455, set out as a note under
section 2 of this title.
EFFECTIVE DATE
Section applicable with respect to taxable years be-
ginning after Sept. 2, 1958, see section 57(d) of Pub. L.
85–866, set out as an Effective Date of 1958 Amendment
note under section 243 of this title.
§ 1243. Loss of small business investment com-
pany
In the case of a small business investment
company operating under the Small Business In-
vestment Act of 1958, if—
(1) a loss is on stock received pursuant to
the conversion privilege of convertible deben-
tures acquired pursuant to section 304 of the
Small Business Investment Act of 1958, and
(2) such loss would (but for this section) be
a loss from the sale or exchange of a capital
asset,
then such loss shall be treated as an ordinary
loss.
(Added Pub. L. 85–866, title I, § 57(a), Sept. 2, 1958,
72 Stat. 1645; amended Pub. L. 91–172, title IV,
§ 433(b), Dec. 30, 1969, 83 Stat. 624; Pub. L. 94–455,
title XIX, § 1901(b)(3)(F), Oct. 4, 197
Source: Supplied 2024 U.S. Code historical extraction · 26 U.S.C. § 1244
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