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Tax

§1244 Ordinary Loss Stock

Small business stock losses = ordinary (not capital) up to $50k/$100k.

Overview

Stock in a domestic small business corporation (assets < $1M at issuance, active business) qualifies under §1244. If it goes to zero, losses up to $50k single / $100k married are ORDINARY — offset W-2, wages, any income. Most founders miss the qualification documentation at formation and lose access.

Best fit
Startup foundersAngel investors in small C-CorpsHigh W-2 earners with failed ventures
Estimated impact
$18–37k tax benefit per failed investment vs capital loss treatment

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