A section 1244 stock is a type of equity named after the portion of the Internal Revenue Code that describes its treatment under tax law. Section 1244 of the tax code allows losses from the sale of shares of small, domestic corporations to be deducted as ordinary losses instead of as capital losses up to a maximum of $50,000 for individual tax returns or $100,000 for joint returns.
To qualify for section 1244 treatment, the corporation, the stock and the shareholders must meet certain requirements. The corporation's aggregate capital must not have exceeded $1 million when the stock was issued and the corporation must not derive more than 50% of its income from passive investments. The shareholder must have paid for the stock and not received it as compensation, and only individual shareholders who purchase the stock directly from the company qualify for the special tax treatment. This is a simplified overview of section 1244 rules; because the rules are complex, individuals are advised to consult a tax professional for assistance with this matter.
The Washington Action of the Board of Directors by Written Consent in Lieu of Meeting to Adopt IRS Code refers to a specific procedure followed by the board of directors of a corporation in the state of Washington. It allows the board to adopt provisions of the Internal Revenue Code (IRS Code) without conducting a physical meeting. Instead, the directors express their consent in writing. This action is particularly relevant when it comes to incorporating relevant provisions from the IRS into the corporation's bylaws or articles of incorporation. The adoption of such provisions enables the corporation to adhere to applicable tax regulations and benefit from the incentives or advantages provided by the IRS. Different types or variations of the Washington Action of the Board of Directors by Written Consent may arise depending on the specific provisions being adopted from the IRS Code. Each provision may require a separate written consent by the directors, ensuring a clear and specific adoption of the desired tax provision. The types may include: 1. Washington Action of the Board of Directors by Written Consent to Adopt IRS Code Section 501(c)(3): This type involves the adoption of provisions from the IRS Code Section 501(c)(3), which pertains to the requirements and regulations for the establishment and operation of tax-exempt nonprofit organizations. 2. Washington Action of the Board of Directors by Written Consent to Adopt IRS Code Section 179: This type entails the adoption of provisions from the IRS Code Section 179, which deals with the deduction of certain types of business-related expenses, such as equipment or property purchases. 3. Washington Action of the Board of Directors by Written Consent to Adopt IRS Code Section 401(k): This type involves the adoption of provisions from the IRS Code Section 401(k), which outlines regulations and requirements for employer-sponsored retirement savings plans. It's important to note that these are just a few examples, and there could be various other sections or provisions of the IRS Code that may be adopted through the Washington Action of the Board of Directors by Written Consent in Lieu of Meeting. The specific types will depend on the corporation's needs and objectives related to tax compliance and benefits.
