§1244 — Losses on small business stock

165(g), 1244(a), (b), (d)(1)(B). Section 1244 stock is stock of a domestic corporation if: (1) when the stock was issued the corporation was a small business; (2) the stock was issued for money or other property (other than stock and securities); and (3) during the five most recent taxable years before the loss was sustained, the corporation derived more than 50% of its aggregate gross receipts from sources other than royalties, rents, dividends, interests, annuities, and sales or exchanges of s

Whether petitioners may deduct an ordinary loss of $100,000 under section 1244 for loss in value of petitioner’s FabuGlass stock in 1995.

(1) Section 1244 stock Petitioner alleges that, after Geotech decided not to drill on the Rio Blanco lease, he asked Geotech for a transfer of his interest to another lease, or his money back. He testified that Geotech then made him a general partner in Royalty Partners. He further alleges that Royalty Partners successfully drilled a well, and that he

(Color Trick); and (2) whether petitioner may claim an ordinary loss pursuant to section 1244 attributable to the worthlessness of his stock in Color Trick.

- 7 - Petitioner reported on his 1991 and 1992 tax returns that he was entitled to deduct losses under section 1244 of $50,000 and $47,350, respectively, on the theory that the Bank lent him the $500,000, that he contributed the $500,000 to EPC's capital, and that his contribution became worthless in 1988.

On his 1991 return petitioner claimed a section 1244 stock loss in the amount of $83,989 for funds invested in TIC/Multilogic, a $9,899 section 162 expense for amounts paid under the computer leases, and a $17,715 legal and professional fees expense for the payments to Mr.

On the amended return, petitioners treated the BCBI stock as small business stock defined by section 1244 and claimed an 2In preparing petitioners' original and amended 1991 Federal income tax returns, the allocation schedule in the agreement was obviously ignored, and petitioners reported the transaction as though the entire purchase price was attributable to the sale of BCBI stock.

Whether petitioner, pursuant to section 1244, is entitled to a deduction for losses relating to stock he purportedly owned in Three Del Rey, Inc.

re entitled to a bad debt deduction in the amount of $55,000; (2) whether petitioners are entitled to Schedule E deductions for legal fees for 1987 and 1988 in the amounts of $88,199 and $37,419, respectively; (3) whether petitioners are entitled to section 1244 stock loss deductions for 1988 and 1989 in the amounts of $92,500 and $96,503, respectively; (4) whether petitioners received dividend distributions from their S corporation in 1987, 1988, and 1989 in the amounts of $106,212, $66,423, an

From Business ; (2) petitioner's itemized deduction for medical and dental expenses is limited to the amount in excess of 7 .5 percent of his adjusted. gross income ; and (3) petitioner is entitled to an ordinary deduction for worthless stock under section 1244 . Background I . Petitioner Petitioner is a lifelong musician and an entrepreneur who has combined his passions for music and business in a variety of business ventures . A consultant by trade, petitioner filed his 2004 Federal income tax

- 24 Vlock and Hammond's officers and directoruse their best efforts to operate Vlock and Hammond in such a manner that stock of Vlock and Hammond would qualify as stock under section 1244, (5) ac- cepted Ms .

eturn was assessed, and notice and demand was issued. The tax was paid on October 16, 1997. The return was subsequently examined, and a deficiency in income tax was proposed. One of the issues in the examination was the treatment of certain stock as section 1244 stock. Martin D. Tropper (Mr. Tropper), pursuant to a power of attorney, was petitioners’ representative in the administrative proceedings. Mr. Tropper was not, at the time, admitted to practice before the United States Tax Court. Petiti

he first stipulation of settled issues stated that the only issues remaining in dispute were (1) whether petitioners could deduct for 1993 contract labor in excess of $463,577, (2) whether Continuum (and thus petitioners) could deduct business expenses for 1994 in excess of $871,480, (3) whether petitioners could deduct for 1994 a stock loss under section 1244 as to Quest Therapy, Inc.

On Form 1040X, petitioner requested section 1244 treatment of the stock loss.

,1 the issues for decision are: (1) Whether amounts paid by petitioners on behalf of a corporation are allowable as an itemized deduction for unreimbursed employee expenses; (2) whether other amounts paid by petitioners on behalf of a corporation are allowable as Schedule C deductions; (3) whether petitioners are entitled to an ordinary loss under section 1244; and (4) whether petitioners are liable for the accuracy-related penalty under section 6662(a).

Shea were married and filed a joint Federal income tax return for the taxable year 2 In their petitions, petitioners asserted an additional ground for deducting the losses claimed, contending that the losses qualified as small business losses under sec. 1244. However, petitioners did not include the sec. 1244 issue in either their trial memorandum or their posttrial briefs and presented no evidence at trial in support of their position. Consequently, the petitioners are deemed to have abandoned

Shea were married and filed a joint Federal income tax return for the taxable year 2 In their petitions, petitioners asserted an additional ground for deducting the losses claimed, contending that the losses qualified as small business losses under sec. 1244. However, petitioners did not include the sec. 1244 issue in either their trial memorandum or their posttrial briefs and presented no evidence at trial in support of their position. Consequently, the petitioners are deemed to have abandoned

Ball testified that he wanted petitioner to claim a loss on petitioner's 1995 return under section 1244 related to a liquor store.

rales, Amos, and Mrs. Nix. - 3 - Morales served as chief executive officer of Telim, Amos as vice president of operations, petitioner as vice president, and Mrs. Nix as the secretary and chief financial officer. The Telim stock was to be treated as section 1244 stock. Upon incorporation, petitioners were issued 3,000 shares of stock in Telim, and Morales and Amos were issued 3,000 shares of stock each. Telim arranged to have single line telephones manufactured in Taiwan and imported to and sold

That sale caused petitioner to claim a $115,000 loss, $100,000 of which was claimed as an “ordinary” loss under section 1244.3 This loss is not presently at issue before the Court.

The issues for decision are: (1) Whether petitioners must report interest income; (2) whether petitioners are entitled to an ordinary loss deduction of $32,500 under section 1244; and (3) whether petitioners are liable for an accuracy-related penalty under section 6662(a).

The issue for decision is whether petitioners are entitled either to a section 166 business bad debt deduction with respect to $128,841 that was transferred to petitioners’ closely held corporation or to a section 1244 ordinary loss deduction in the same amount with respect to the stock of petitioners’ closely held corporation.

Choate authorized petitioner to issue section 1244 stock on July 27, 1989.

On December 30, 1990, following advice of their tax return preparer and in an attempt to qualify their investment in UI as a section 1244 ordinary loss for 1990, petitioners caused UI to issue additional stock in the name of the family trust in exchange for the $184,874 that allegedly was owed to petitioners or the family trust under the 1989 promissory note.

On the 1979 tax return petitioner claimed a section 1244 loss of $20,895 from Danny's Hideaway.

On the 1979 tax return petitioner claimed a section 1244 loss of $20,895 from Danny's Hideaway.

(HTC) in Connecticut, and, as HTC's board of directors, adopted a resolution for the issuance of "Section 1244 Stock", as defined in the Internal Revenue Code.3 All stock issued by HTC qualifies as section 1244 stock.

d December 12, 1988. Georgiou was named sole director, president, secretary, and treasurer. During that meeting, it was resolved that 10,000 shares of corporate stock at - 11 - $10 per share would be issued to Georgiou pursuant to the provisions of section 1244. It was also resolved that the corporation should borrow $400,000 from Georgiou and give him a promissory note for that amount, payable on demand in 5 years, with annual interest payments at the rate of 10 percent per annum. The March 3,

d December 12, 1988. Georgiou was named sole director, president, secretary, and treasurer. During that meeting, it was resolved that 10,000 shares of corporate stock at - 11 - $10 per share would be issued to Georgiou pursuant to the provisions of section 1244. It was also resolved that the corporation should borrow $400,000 from Georgiou and give him a promissory note for that amount, payable on demand in 5 years, with annual interest payments at the rate of 10 percent per annum. The March 3,

d December 12, 1988. Georgiou was named sole director, president, secretary, and treasurer. During that meeting, it was resolved that 10,000 shares of corporate stock at - 11 - $10 per share would be issued to Georgiou pursuant to the provisions of section 1244. It was also resolved that the corporation should borrow $400,000 from Georgiou and give him a promissory note for that amount, payable on demand in 5 years, with annual interest payments at the rate of 10 percent per annum. The March 3,