26 U.S. Code § 1242 - Losses on small business investment company stock

(1) a loss is on stock in a small business investment company operating under the Small Business Investment Act of 1958, and
(2) such loss would (but for this section) be a loss from the sale or exchange of a capital asset,
then such loss shall be treated as an ordinary loss. For purposes of section 172 (relating to the net operating loss deduction) any amount of loss treated by reason of this section as an ordinary loss shall be treated as attributable to a trade or business of the taxpayer.


(Added Pub. L. 85–866, title I, § 57(a),Sept. 2, 1958, 72 Stat. 1645; amended Pub. L. 94–455, title XIX, § 1901(b)(3)(F),Oct. 4, 1976, 90 Stat. 1793.)
References in Text

The Small Business Investment Act of 1958, referred to in cl. (1), is Pub. L. 85–699, Aug. 21, 1958, 72 Stat. 689, as amended, which is classified principally to chapter 14B (§ 661 et seq.) of Title 15, Commerce and Trade. For complete classification of this Act to the Code, see Short Title note set out under section 661 of Title 15 and Tables.

1976—Pub. L. 94–455substituted “an ordinary loss” for “a loss from the sale or exchange of property which is not a capital asset”, each time appearing.
Effective Date of 1976 Amendment

Amendment by Pub. L. 94–455applicable with respect to taxable years beginning after Dec. 31, 1976, see section 1901(d) ofPub. L. 94–455, set out as a note under section 2 of this title.
Effective Date

Section applicable with respect to taxable years beginning after Sept. 2, 1958, see section 57(d) ofPub. L. 85–866, set out as an Effective Date of 1958 Amendment note under section 243 of this title.

The table below lists the classification updates, since Jan. 3, 2012, for this section. Updates to a broader range of sections may be found at the update page for containing chapter, title, etc.

The most recent Classification Table update that we have noticed was Tuesday, August 13, 2013

An empty table indicates that we see no relevant changes listed in the classification tables. If you suspect that our system may be missing something, please double-check with the Office of the Law Revision Counsel.

26 USCDescription of ChangeSession YearPublic LawStatutes at Large


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