Holder contributed $50,000 to a newly formed corporation in exchange for § 1244 stock.During the year, he sold the stock to Buyer.The stock qualifies as § 1244 stock in Buyer's hands.

Question

Quizplus · Accepted Answer

Section 1244 stock designation applies to the original holder of the stock who received it in exchange for money or other property (not including stock and securities). It does not transfer to subsequent buyers, so the stock would not qualify as § 1244 stock in the Buyer's hands.

Holder Contributed $50,000 to a Newly Formed Corporation in Exchange