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Originally Posted by javtax Thanks for the information.
the company filed chapter 11 and I have all the documentation along with the fact that I sold all of my shares for a few pennies. I do have proof for tax purposes.
I was told that if the stock qualifies for "section 1244 stock" then I can deduct the entire loss in one year Versus a capital loss which limits you to deduct only $3k per year until it is used up.
My question now is, how do I go about finding out if "crappy" stock falls under the category of section 1244 stock.
I have called multiple places and no one knows how to provide an answer. I even went to capital one finance site, I use them to buy stocks, and they didnt know either. |
I was told that if the stock qualifies for "section 1244 stock" then I can deduct the entire loss in one year Versus a capital loss which limits you to deduct only $3k per year until it is used up.=========> Under section 1244, your losses treated as capital losses are treated as ordinary losses; Ordinary losses are not limited to $3k per year. Your ordinary losses can be fully deducted in the year of the loss. Ordinary losses offset other sources of income that is taxed at ordinary rates, which can be as high as 39.6% for 2016 I guess. The maximum 1244 loss that can be taken in any year is:$100k for married individuals filing a joint return;
;$50k for all others. To qualify as a section 1244 small business stock, the company must be small. Capital receipts of the company can't be over $1M including the value of any stock previously issued; You must have paid for the stock with money or other property.then, you should report the loss, up to the maximum limitation, on line 10 of Form 4797. You should report any loss in excess of the limit on Sch Dof 1040.
My question now is, how do I go about finding out if "crappy" stock falls under the category of section 1244 stock.=====>>in addition to as said above; As owner of the 1244 stock, you must be an individual, or a partner in a partnership
Most of the company's gross receipts must be from operations. For a period of the corporation's most recent five years ending before the date of the loss, gross receipts from royalties, rents, dividends, interest, annuities, and sales or exchanges of stock or securities must not exceed 50% of the receipts of the company
I have called multiple places and no one knows how to provide an answer. I even went to capital one finance site, I use them to buy stocks, and they didnt know either.========>> Section 1244 of the Internal Revenue Codeprescribes specific requirements for: the corp issuing the small business stock; the stock itself; and the shareholders of the corp. aggregate capital must not exceed $1M at the time the ?1244 stock is issued to its shareholders; Because the rules under sec1244 are complicated, I encourage you to contact your tax advisor, an IRS enrolled agent / a CPA doing taxes in your local area for professional help