Treasury Regulations (26 C.F.R.)
26 CFR § 1.1242-1
Losses on small business investment company stock.
# (a) In general.
Any taxpayer who sustains a loss for a taxable year beginning after September 2, 1958, as a result of the worthlessness, or from the sale or exchange, of the stock of a small business investment company (whether or not such stock was originally issued to such taxpayer) shall treat such loss as a loss from the sale or exchange of property which is not a capital asset, if at the time of such loss:
(1) The company which issued the stock is licensed to operate as a small business investment company pursuant to regulations promulgated by the Small Business Administration (13 CFR part 107), and
(2) Such loss would, but for the provisions of section 1242, be a loss from the sale or exchange of a capital asset.
# (b) Treatment of losses for purposes of section 172.
For the purposes of section 172 (relating to the net operating loss deduction), any amount of loss treated by reason of section 1242 as a loss from the sale or exchange of property which is not a capital asset shall be treated as attributable to the trade or business of the taxpayer. Accordingly, the limitation of section 172(d)(4) on the allowance of nonbusiness deductions in computing a net operating loss shall not apply to any loss with respect to the stock of a small business investment company as described in paragraph (a) of this section. See section 172(d) and § 1.172-3.
# (c) Statement to be filed with return.
A taxpayer claiming a deduction for a loss on the stock of a small business investment company shall file with his income tax return a statement containing: The name and address of the small business investment company which issued the stock, the number of shares, basis, and selling price of the stock with respect to which the loss is claimed, the respective dates of purchase and sale of such stock, or the reason for its worthlessness and approximate date thereof. For the rules applicable in determining the worthlessness of securities, see section 165 and the regulations thereunder.
[T.D. 6500, 25 FR 12022, Nov. 26, 1960]
Source: view the official text
In this part (40 sections)
- 1.1231-2 · Livestock held for draft, breeding, dairy, or sporting…
- 1.1232-1 · Bonds and other evidences of indebtedness; scope of section.
- 1.1232-2 · [Reserved]
- 1.1232-3 · Gain upon sale or exchange of obligations issued at a…
- 1.1232-3A · Inclusion as interest of original issue discount on certain…
- 1.1233-1 · Gains and losses from short sales.
- 1.1233-2 · Hedging transactions.
- 1.1234-1 · Options to buy or sell.
- 1.1234-2 · Special rule for grantors of straddles applicable to certain…
- 1.1234-3 · Special rules for the treatment of grantors of certain…
- 1.1234-4 · Hedging transactions.
- 1.1235-1 · Sale or exchange of patents.
- 1.1235-2 · Definition of terms.
- 1.1236-1 · Dealers in securities.
- 1.1237-1 · Real property subdivided for sale.
- 1.1238-1 · Amortization in excess of depreciation.
- 1.1239-1 · Gain from sale or exchange of depreciable property between…
- 1.1239-2 · Gain from sale or exchange of depreciable property between…
- 1.1240-1 · Capital gains treatment of certain termination payments.
- 1.1241-1 · Cancellation of lease or distributor's agreement.
- 1.1242-1 · Losses on small business investment company stock.
- 1.1243-1 · Loss of small business investment company.
- 1.1244(a)-1 · (a)-1 Loss on small business stock treated as ordinary…
- 1.1244(b)-1 · (b)-1 Annual limitation.
- 1.1244(c)-1 · (c)-1 Section 1244 stock defined.
- 1.1244(c)-2 · (c)-2 Small business corporation defined.
- 1.1244(d)-1 · (d)-1 Contributions of property having basis in excess of…
- 1.1244(d)-2 · (d)-2 Increases in basis of section 1244 stock.
- 1.1244(d)-3 · (d)-3 Stock dividend, recapitalizations, changes in name,…
- 1.1244(d)-4 · (d)-4 Net operating loss deduction.
- 1.1244(e)-1 · (e)-1 Records to be kept.
- 1.1245-1 · General rule for treatment of gain from dispositions of…
- 1.1245-2 · Definition of recomputed basis.
- 1.1245-3 · Definition of section 1245 property.
- 1.1245-4 · Exceptions and limitations.
- 1.1245-5 · Adjustments to basis.
- 1.1245-6 · Relation of section 1245 to other sections.
- 1.1248-1 · Treatment of gain from certain sales or exchanges of stock…
- 1.1248-2 · Earnings and profits attributable to a block of stock in…
- 1.1248-3 · Earnings and profits attributable to stock in complex cases.