- 10 - OPINION A. Whether Petitioner’s FabuGlass Stock Qualifies as Section 1244 Stock 1. Requirements for Section 1244 Stock Generally, when corporate stock becomes worthless, the loss is a capital loss. However, an individual who has what would otherwise be a capital loss on stock that qualifies as section 1244 stock may treat up to $50,000 ($100,000 in the case of a joint return) of the loss as an ordinary loss. Sec. 1244(a), (b), (d)(1)(B). Section 1244 stock is stock of a domestic corporation if: (1) At the time that stock is issued, the corporation had not received money or other property in excess of $1 million for its stock as a contribution to capital or as paid- in surplus; (2) the stock was issued for money or other property other than stock or securities; and (3) the corporation, during its 5 most recent taxable years (or, if less, the period during which the corporation has been in existence) ending before the date the loss in question was sustained, derived more than 50 percent of its aggregate gross receipts from sources other than royalties, rents, dividends, interest, annuities, and sales or exchanges of stocks or securities. Sec. 1244(c)(1). The gross receipts requirement does not apply if, for the 5-year period described above, the amount of deductions allowed by Chapter 1 (other than by sections 172, 243, 244, and 245) exceeds the amount of the corporation’s gross income. Sec. 1244(c)(2)(C).Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011