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 Illinois Action of the Board of Directors by Written Consent in Lieu of Meeting to Adopt IRS Code is a legal process through which the board of directors of a corporation in Illinois can adopt the Internal Revenue Service (IRS) Code without conducting an actual meeting. This method allows for efficient decision-making and eliminates the need for holding physical meetings, especially in situations where immediate action is required and scheduling a meeting may not be feasible. To initiate the action, the directors of the corporation prepare a written consent document that outlines the proposal to adopt the IRS Code and includes the specific provisions or amendments they wish to incorporate. The written consent must comply with the requirements of the Illinois Business Corporation Act and the corporation's bylaws. Keywords: 1. Action of the Board of Directors: The collective decision-making process undertaken by the board of directors of a corporation. 2. Written Consent: A formal document prepared by the directors that signifies their agreement and acceptance of a proposed action. 3. In Lieu of Meeting: Instead of holding a physical meeting, the directors convey their approval and consent through the written document. 4. Adopt IRS Code: The process of incorporating or adopting provisions from the Internal Revenue Service (IRS) Code into the corporation's governing documents. 5. Illinois: Refers to the specific jurisdiction where this action is applicable, in this case, the state of Illinois. 6. Internal Revenue Service (IRS) Code: The set of tax laws and regulations outlined by the IRS that governs federal taxation matters. Types of Illinois Action of the Board of Directors by Written Consent in Lieu of Meeting to Adopt IRS Code: While there are no specific types of this action, it can be undertaken for various purposes, depending on the specific requirements of the corporation. For example, a corporation might adopt specific provisions of the IRS Code related to tax deductions, corporate tax rates, or tax-exempt status. The purpose and content of the action may vary based on the corporation's needs and objectives. Overall, the Illinois Action of the Board of Directors by Written Consent in Lieu of Meeting to Adopt IRS Code is an efficient and flexible process that allows corporations to adopt the necessary provisions of the IRS Code without the need for a physical meeting while ensuring compliance with the relevant laws and regulations.
