Which provision could best be justified as encouraging small business?
A) Ordinary loss allowed on § 1244 stock.
B) Percentage depletion.
C) Charitable contributions deduction.
D) Interest deduction on home mortgage.
E) None of these.

Question

Quizplus · Accepted Answer

Section 1244 of the Internal Revenue Code allows investors in small businesses to deduct a loss on the sale, exchange, or worthlessness of qualifying small business stock as an ordinary loss rather than a capital loss. This provision encourages investment in small businesses by providing a more favorable tax treatment for losses.

Which Provision Could Best Be Justified as Encouraging Small Business