Treasury Regulations · 26 CFR
§ 1.1244(d)-1. Contributions of property having basis in excess of value.
Regulation text, no changes From the eCFR, current as of October 15, 2026. The eCFR is an authoritative but unofficial editorial compilation of the Code of Federal Regulations; the official text is the annual CFR on govinfo. Compare it with this section on ecfr.gov (external site) or the official annual CFR on govinfo (external site).
Regulation under 26 U.S.C. § 1244(d)
Cite as 26 CFR § 1.1244(d)-1
At a glance
Read from the text and its source citation. Not part of the regulation.
- Status
- In the current eCFR
- Issued
- October 8, 1960 by T.D. 6495
- Issued under
- 26 U.S.C. § 1244(d)
- Length
- 683 words · about 3 min to read
- Cross-references
- cites 2 Code sections and 0 regulations; cited by 0
B transfers property with an adjusted basis of $1,000 and a fair market value of $250 to a corporation for 10 shares of section 1244 stock in an exchange that qualifies under section 351. The basis of B's stock is $1,000 ($100 per share), but, solely for purposes of section 1244, the total basis of the stock must be reduced by $750, the excess of the adjusted basis of the property exchanged over its fair market value. Thus, the basis of such stock for purposes of section 1244 is $250 and the basis of each share for such purposes is $25. If B sells his 10 shares for $250, he will recognize a loss of $750, all of which must be treated as a capital loss. If he sells the 10 shares for $200, then $50 of his total loss of $800 will be treated as an ordinary loss under section 1244, assuming the various requirements of such section are satisfied, and the remaining $750 will be a capital loss.
B owns property with a basis of $20,000. The fair market value of the property unencumbered is $15,000 but the property is subject to a $2,000 mortgage. B transfers the encumbered property to a corporation for 100 shares of section 1244 stock in an exchange that qualifies under section 351. The basis of the shares, determined in accordance with section 358, is $18,000 or $180 per share, but solely for purposes of section 1244 the basis is $13,000 ($130 per share), which is its basis for purposes other than section 1244, reduced by $5,000, the excess of the adjusted basis, immediately before the exchange, of the property transferred over its fair market value.
C transfers business assets to a corporation for 100 shares of section 1244 stock in an exchange that qualifies under section 351. The assets transferred are as follows:
| Basis | Fair market value | |
|---|---|---|
| Cash | $10,000 | $10,000 |
| Inventory | 15,000 | 30,000 |
| Depreciable property | 50,000 | 20,000 |
| Land | 25,000 | 10,000 |
| 100,000 | 70,000 |
The basis for the shares received by C is $100,000, which is applied $1,000 to each share. However, the basis of the shares for purposes of section 1244 is $70,000 ($700 per share), the basis for general purposes reduced by $30,000, the excess of the aggregate adjusted basis of the property transferred over the aggregate fair market value of such property.
[T.D. 6495, 25 FR 9679, Oct. 8, 1960]
Cross-references
Computed from the citations in the text of 26 CFR.
Code sections it cites
Amendment history
From the source citation at the end of the section, newest first. T.D. is a Treasury decision; FR is the Federal Register.
- Issued by T.D. 6495 (25 FR 9679)
Where it sits in 26 CFR
- Subchapter A Income tax
- Part 1 Income taxes
- Special Rules for Determining Capital Gains and Losses
Nearby sections
- § 1.1244(a)-1 Loss on small business stock treated as ordinary loss.
- § 1.1244(b)-1 Annual limitation.
- § 1.1244(c)-1 Section 1244 stock defined.
- § 1.1244(c)-2 Small business corporation defined.
- § 1.1244(d)-1 Contributions of property having basis in excess of value.
- § 1.1244(d)-2 Increases in basis of section 1244 stock.
- § 1.1244(d)-3 Stock dividend, recapitalizations, changes in name, etc.
- § 1.1244(d)-4 Net operating loss deduction.
- § 1.1244(e)-1 Records to be kept.