26 U.S. Code § 1242 - Losses on small business investment company stock
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(1) a loss is on stock in a small business investment company operating under the Small Business Investment Act of 1958, and
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.
Source(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.