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").
Protecting Your Section 1244 Deduction
If you own stock in a small corporation and the corporation suffers a business failure, its stock can become worthless. Being able to deduct a loss on the stock as an ordinary loss as opposed to a capital loss can substantially reduce your taxes.
Ordinary Loss:
An ordinary loss is fully (100%) deductible in the year the loss is recognized. It may be deducted against other sources of income, such as a spouse's wages from a job, interest and dividends.
Capital Loss
A net capital loss (capital losses exceed capital gains) for individuals has an annual deduction limit of $3,000. If a net capital loss exceeds $3,000 in any given year, the excess over $3,000 must be carried over to the following tax year where it is used to determine net capital gains and losses of that year.
Keeping Records
Keeping appropriate records is critical for protecting a Section 1244 deduction. The IRS can disallow ordinary loss treatment permitted under Section 1244 if you don't have the appropriate supporting documentation.
What You Should Do
Corporations: If you set up a corporation, make a reference in your corporate records that the stock issued qualified as Section 1244 stock. If audited, the IRS may inspect your corporate records to determine if there is such a reference.
Gross Receipts: Provide a record of the corporation's gross receipts data for five years or whatever number of years the corporation has been in existence.
Retain Information About Shares Purchased: If you are the purchaser of stock of a small business corporation, you need to retain information about the shares you purchased.
Keep a record of:
- the number of shares received
- the date the stock was issued to you, and
- the price paid for the stock.