Treasury Regulations (26 C.F.R.)
26 CFR § 1.1244(d)-4
Net operating loss deduction.
# (a) General rule.
For purpose of section 172, relating to the net operating loss deduction, any amount of loss that is treated as an ordinary loss under section 1244 (taking into account the annual dollar limitation of that section) shall be treated as attributable to the trade or business of the taxpayer. Therefore, this loss is allowable in determining the taxpayer's net operating loss for a taxable year and is not subject to the application of section 172(d)(4), relating to nonbusiness deductions. A taxpayer may deduct the maximum of ordinary loss permitted under section 1244(b) even though all or a portion of the taxpayer's net operating loss carryback or carryover for the taxable year was, when incurred, a loss on section 1244 stock.
# (b) Example.
The provisions of this section may be illustrated by the following example:
Example:
A, a single individual, computes a net operating loss of $15,000 for 1980 in accordance with the rules of § 1.172-3, relating to net operating loss in case of a taxpayer other than a corporation. Included within A's computation of this net operating loss is a deduction arising under section 1244 for a loss on small business stock. A had no taxable income in 1977, 1978, or 1979. Assume that A can carry over the entire $15,000 loss under the rules of section 172. In 1981 A has gross income of $75,000 and again sustains a loss on section 1244 stock. The amount of A's 1981 loss on section 1244 stock is $50,000. A may deduct the full $50,000 as an ordinary loss under section 1244 and the full $15,000 as a net operating loss carryover in 1981.
[T.D. 7779, 46 FR 29473, June 2, 1981]
Source: view the official text
In this part (40 sections)
- 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 · Loss on small business stock treated as ordinary loss.
- 1.1244(b)-1 · Annual limitation.
- 1.1244(c)-1 · Section 1244 stock defined.
- 1.1244(c)-2 · Small business corporation defined.
- 1.1244(d)-1 · Contributions of property having basis in excess of value.
- 1.1244(d)-2 · Increases in basis of section 1244 stock.
- 1.1244(d)-3 · Stock dividend, recapitalizations, changes in name, etc.
- 1.1244(d)-4 · Net operating loss deduction.
- 1.1244(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.
- 1.1248-4 · Limitation on tax applicable to individuals.
- 1.1248-5 · Stock ownership requirements for less developed country…
- 1.1248-6 · Sale or exchange of stock in certain domestic corporations.
- 1.1248-7 · Taxpayer to establish earnings and profits and foreign taxes.
- 1.1248-8 · Earnings and profits attributable to stock following certain…
- 1.1248(f)-1 · Certain nonrecognition distributions.
- 1.1248(f)-2 · Exceptions for certain distributions and attribution…
- 1.1248(f)-3 · Reasonable cause and effective/applicability dates.
- 1.1249-1 · Gain from certain sales or exchanges of patents, etc., to…