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.
Hawaii Action of the Board of Directors by Written Consent in Lieu of Meeting to Adopt IRS Code refers to a specific process undertaken by a corporation in Hawaii to adopt the Internal Revenue Code (IRS Code) without holding a physical meeting of the board of directors. This alternative method allows for efficient decision-making and saves time. The board of directors is the governing body responsible for making important decisions and setting policies for a corporation. Generally, these decisions are made during formal board meetings where directors physically convene and discuss matters. However, in specific situations, such as the adoption of the IRS Code, the board of directors can instead take action by written consent, eliminating the need for a physical meeting. This process involves providing each director with the proposed action to be taken, which in this case is adopting the IRS Code. Each director then considers the proposal and signs a written consent document indicating their approval. This written consent can be collected through traditional means, such as mailing physical documents, or through electronic means, such as email or electronic signature platforms. To ensure the validity of this written consent, it is crucial that all directors sign the document within a specific timeframe. In Hawaii, the corporation's bylaws should specify the required number of director signatures needed for an action to be considered as adopted. Generally, a majority or super majority of directors need to consent to the proposed action. The term "Hawaii Action of the Board of Directors by Written Consent in Lieu of Meeting to Adopt IRS Code" does not typically refer to different types, but rather describes the specific procedure involved in adopting the IRS Code without holding a physical meeting. However, corporations may have slightly different bylaws or specific requirements for using this method, which could result in variations in the specific procedure. Keywords: Hawaii, action, board of directors, written consent, IRS Code, meeting, adoption, corporation, decision-making, policies, physical meeting, efficient, decision, written consent document, approval, timeframe, bylaws, director signatures, majority, super majority, procedure.
