It is May 2, 2026. As the market thins out “Zombie LLCs” (Article #660), investors are rediscovering the power of Section 1244 stock to mitigate their losses.
- Ordinary Loss vs. Capital Loss: Under Section 1244, an individual can treat a loss on small business stock as an ordinary loss (deductible against wages) rather than a capital loss (limited to $3,000/year).
- Limits: You can deduct up to $50,000 (or $100,000 for joint filers) in a single year.
- The Shark Insight: “No one likes to talk about failure, but smart sharks prepare for it. If your LLC is a ‘Qualified Small Business,’ ensure your initial issuance documents specifically cite Section 1244. If things go south, you want to write that loss off against your income, not carry it forward for the next 30 years.”