Per Diem Rates from the U.S. General Services Administration
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Rates are set by fiscal year, effective October 1 each year. Find current rates in the continental United States ("CONUS Rates").
Section 1244 Stock Deduction Limits
Unmarried Individuals
Up to $50,000 of the loss on Section 1244 stock may be claimed by unmarried individuals as an ordinary loss.
Any excess loss over $50,000 is treated as a capital loss and must comply with the rules for capital losses.
Married Individuals
Up to $100,000 of the loss on Section 1244 stock may be claimed as an ordinary loss by married individuals filing a joint return even if only one spouse owns the stock.
Any excess loss over $100,000 is subject to the regular capital loss rules, which limit a net capital loss deduction up to $3,000 in any given year; any excess loss must be carried over to the following year.
What Qualifies as Section 1244 Stock?
- The corporation can have equity (total assets minus total liabilities) up to $1 million at the time the stock is issued.
- The stock must be issued for cash or property and not stock and securities.
- More than half the corporation's income for the preceding five years before the loss must have come from business operations, and not from passive income (rents, royalties, dividends, interest. annuities, or gains from the sale of stocks or securities).
- If the corporation was not in existence for five years before your loss, then the years it was in existence will be considered for the gross receipts test.
- You must acquire the stock by purchase (not by-gift, inheritance, or by purchasing the stock from someone else).
- You must be the original purchaser of the stock.
Keep records!
Your records must show that the corporation's stock qualifies as Section 1244 stock.
For example:
- In the corporate minutes and/or corporate by-laws, you should make reference to the issuance of Section 1244 stock.
- Keep a record of gross receipts for the past five years or whatever length of time is applicable if less than five years
- Show sources of income and the amounts from each source.
In the event of an audit, special tax treatment may be lost without sufficient evidence showing stock qualified for special tax treatment under IRC Section 1244.