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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Business Law
Satisfied Customers: 41221
Experience:  Run my own successful business/contract law practice.
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Can an S Corporation shareholder use section 1202 to avoid

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Can an S Corporation shareholder use section 1202 to avoid taxation of gain upon disposition, related to 1244 stock
Submitted: 1 year ago.
Category: Business Law
Expert:  Dimitry K., Esq. replied 1 year ago.
Thank you for your question. Please permit me to assist you with your concerns.
To answer directly, upon review of both Section 1202 and 1244 stock, the sections appear to be somewhat unrelated as reporting. That is, if the stock is sold at a loss under 1244, the loss is reported by the shareholder, but that presumes that there is therefore no gain under 1202, as 1202 is related to actual gains against the stock rather than losses. A stock evaluated at $100,000 but sold at $50,000 has a $50,000 loss under 1244, there is no inherent gain unless the initial stock was gifted or included as a stock option for which the individual never invested anything directly.
Sincerely,
Dimitry, Esq.

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