In March 2011, Jim Jorges formed a small business corporation and issued Section 1244 small business stock. In November 2012, the company went bankrupt and Jim incurred a $75,000 loss for amounts invested in the common stock of the small business corporation. If Jim ﬁles a joint return, he should report a $50,000 ordinary loss and a $25,000 long-term capital loss.

Question

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Since Jim ﬁled a joint return, all of the $75,000 loss is ordinary. On a joint return, up to $100,000 may be taken as an ordinary loss deduction on Section 1244 stock.

In March 2011, Jim Jorges Formed a Small Business Corporation