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PUBLIC LAW 86-866-SEPT. 2, 1958
[72 S T AT.
TITLE II—SMALL BUSINESS TAX REVISION ACT OF 1958 SECTION 201. SHORT TITLE.
26 USC 165.
This title may be cited as the "Small Business Tax Revision Act of 1958". SEC. 202. LOSSES ON SMALL BUSINESS STOCK. (a) CROSS KEFERENCE.—Section 165 of the Internal Revenue Code Qf 1954 (relating to deduction for losses) is amended by adding at the end of subsection (h) the following new paragraph— "(5) For special rule for losses on small business stock, see section 1244." (b) TREATMENT AS ORDINARY Loss.—Part IV of subchapter P of
chapter 1 of the Internal Revenue Code of 1954 (relating to special rules for determining capital gains and losses) is amended by adding after section 1243 (as added by section 57 of this Act) the following new section: "SEC. 1244. LOSSES ON SMALL BUSINESS STOCK. " (a) GENERAL RULE. — I n the case of an individual, a loss on sec-
tion 1244 stock issued to such individual or to a partnership which would (but for this section) be treated as a loss from the sale or exchange of a capital asset shall, to the extent provided in this section, be treated as a loss from the sale or exchange of an asset which is not a capital asset. " (b) MAXIMUM AMOUNT FOR A N Y TAXABLE YEAR.—For any taxable year the aggregate amount treated by the taxpayer by reason of this section as a loss from the sale or exchange of an asset which is not a capital asset shall not exceed— '^(1) $25,000, or "(2) $50,000, in the case of a husband and wife filing a joint return for such year under section 6013. "(c)
SECTION 1244 STOCK DEFINED.—
"(1) IN GENERAL.—For purposes of this section, the term 'section 1244 stock' means common stock in a domestic corporation if— " (A) such corporation adopted a plan after June 30, 1958, to offer such stock for a period (ending not later than two years after the date such plan was adopted) specified in the plan, " (B) at the time such plan was adopted, such corporation was a small business corporation, " (C) at the time such plan was adopted, no portion of a prior offering was outstanding, " (D) such stock was issued by such corporation, pursuant to such plan, for money or other property (other than stock and securities), and " (E) such corporation, during the period of its 5 most recent taxable years ending before the date the loss on such stock is sustained (or if such corporation has not been in existence for 5 taxable years ending before such date, during the period of its taxable years ending before such date, or if such corporation has not been in existence for one taxable year ending before such date, during the period such corporation has been in existence before such date), derived more than 50 percent of its aggregate gross receipts from sources other than royalties, rents, dividends, interest, annuities, and sales or exchanges of stock or securities (gross receipts from such sales or exchanges being taken into account for purposes of this subparagraph omy to the extent
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