Gary and Tom own 100 stock. Gary acquired the stock for $60,000 from Rosa Co. three years when it was formed. Tom acquired the stock two years ago from Julie for $45,000. Gary and Tom are single. Rosa Co. meets all the requirements of Code Sec. 1244. Rosa Co ago
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Section 1244 stock :
The stock qualifies under this section has special treatment under Internal Revenue Service(IRS), the shareholders who holds such shares are eligible to treat the capital loss incurred from the disposal of the stock of this class as ordinary loss. And, as per IRS, the ordinary loss is deductible from the gross taxable income of the taxpayer without any annual limit.
The stock which qualifies for this section (1244) must belongs to the shares of domestic small business corporation(capital less than $1 million) and the limit for considering the capital loss from the sale of disposal of these shares into ordinary loss is up to $50,000 for individual and $100,000 for joint returns.
To be eligible for this treatment, the taxpayers must purchase these stocks as shareholder directly from the company and not received as compensation.
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