Business

/

ArcaMax

Dealing With Taxes When You Sell Your Stock

Cliff Ennico on

"I invested in a small business corporation several years ago. The investment hasn't worked out the way I thought it would, and now I'm looking for the exit door.

Is there any way I can recoup some of my investment by taking a deduction on my taxes?"

The short answer to this question is "maybe."

First, take a look at the corporation's books and records, particularly the minutes of the initial meeting of incorporators or initial meeting of directors the corporation passed when it was first organized.

You are looking for three resolutions that will look something like this:

RESOLVED, That stock of the Corporation that shall be issued by the Corporation to individuals or partnerships in consideration of money or other property (other than services, stock and securities), if at the time the Corporation is a "small business corporation" as defined in Section 1244 of the Internal Revenue Code of 1986, as it shall be amended (the "Code"), and which shall otherwise meet the requirements of "Section 1244 stock" as defined in Section 1244 of the Code, shall be eligible to receive the benefits of the provisions of Section 1244 of the Code.

 

RESOLVED, That stock of the Corporation that shall be issued by the Corporation to individuals, partnerships or corporations in consideration of money or other property (other than services, stock and securities), if at the time the Corporation is a "qualified small business" as defined in Section 1202 of the Code, and which shall otherwise meet the requirements of "qualified small business stock" as defined in Section 1202 of the Code, shall be eligible to receive the benefits of the provisions of Section 1202 of the Code.

RESOLVED, that the Corporation shall deliver to its shareholders, the U.S. Department of the Treasury and the Internal Revenue Service any and all reports, documents and other information required by Section 1202(d)(1)(C) of the Code."

If the corporation's records contain all or some of these resolutions, you may be in luck.

Section 1244 of the U.S. tax code allows shareholders in "small business corporations" who are individuals or partnerships (not corporations) to deduct any losses they sustain when they dispose of their stock up to $50,000 for an individual or $100,000 for a married couple filing jointly. To qualify for the deduction:

...continued

swipe to next page
 

 

Comics

Beetle Bailey Carpe Diem Agnes Bizarro BC 1 and Done