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Treasury Regulations · 26 CFR

§ 1.1244(d)-4. Net operating loss deduction.

In effect eCFR current as of October 15, 2026

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)-4

At a glance

Read from the text and its source citation. Not part of the regulation.

Status
In the current eCFR
Issued
June 2, 1981 by T.D. 7779
Issued under
26 U.S.C. § 1244(d)
Length
292 words · about 1 min to read
Cross-references
cites 2 Code sections and 1 regulation; cited by 0
(a) General rule. For purpose of section 172, relating to the net operating loss deduction, any amount of loss that is treated as an ordinary loss under section 1244 (taking into account the annual dollar limitation of that section) shall be treated as attributable to the trade or business of the taxpayer. Therefore, this loss is allowable in determining the taxpayer's net operating loss for a taxable year and is not subject to the application of section 172(d)(4), relating to nonbusiness deductions. A taxpayer may deduct the maximum of ordinary loss permitted under section 1244(b) even though all or a portion of the taxpayer's net operating loss carryback or carryover for the taxable year was, when incurred, a loss on section 1244 stock.
(b) Example. The provisions of this section may be illustrated by the following example:
Example:

A, a single individual, computes a net operating loss of $15,000 for 1980 in accordance with the rules of § 1.172-3, relating to net operating loss in case of a taxpayer other than a corporation. Included within A's computation of this net operating loss is a deduction arising under section 1244 for a loss on small business stock. A had no taxable income in 1977, 1978, or 1979. Assume that A can carry over the entire $15,000 loss under the rules of section 172. In 1981 A has gross income of $75,000 and again sustains a loss on section 1244 stock. The amount of A's 1981 loss on section 1244 stock is $50,000. A may deduct the full $50,000 as an ordinary loss under section 1244 and the full $15,000 as a net operating loss carryover in 1981.

[T.D. 7779, 46 FR 29473, June 2, 1981]

Other regulations under § 1244

Cross-references

Computed from the citations in the text of 26 CFR.

Code sections it cites

Regulations 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.

  1. Issued by T.D. 7779 (46 FR 29473)

Where it sits in 26 CFR

  1. Subchapter A Income tax
  2. Part 1 Income taxes
  3. Special Rules for Determining Capital Gains and Losses

Nearby sections