Maryland Minutes of Special Meeting of the Board of Directors of (Name of Corporation) to Adopt Stock Ownership Plan under Section 1244 of the Internal Revenue Code In accordance with the Maryland Corporation Law, a special meeting of the Board of Directors of (Name of Corporation) was held on [Date]. The purpose of this meeting was to discuss and formally adopt a Stock Ownership Plan under Section 1244 of the Internal Revenue Code. The Board of Directors convened at [Time] and were present at the meeting: [List of Directors' Names]. Also, present were [List any other individuals present such as the corporate secretary or legal counsel]. The meeting was called to order by the Chairperson, [Name of Chairperson], who verified a quorum was present. The Chairperson outlined the agenda and opened the floor for discussion regarding the adoption of the Stock Ownership Plan. During the course of the meeting, the Board of Directors thoroughly reviewed the provisions and implications of the Stock Ownership Plan as outlined in the proposed document. Pertinent topics, such as tax benefits under Section 1244 of the Internal Revenue Code, were discussed extensively. After careful consideration and evaluation of the proposed Stock Ownership Plan, the Board of Directors unanimously agreed to adopt the plan. The plan is intended to promote employee ownership and incentivize key employees by offering them stock ownership in the corporation. The Stock Ownership Plan includes provisions specifying eligibility criteria, the allocation of shares, vesting periods, restrictions on transferability, and valuation methods for the shares. The plan comprises essential details to ensure compliance with Section 1244 of the Internal Revenue Code and maximize the potential tax benefits for the corporation and its shareholders. Upon adoption of the Stock Ownership Plan, a motion was made by [Director's Name] and seconded by [Director's Name]. A roll call vote was conducted, and all members of the Board of Directors present voted in favor of the adoption, establishing a unanimous decision. It was resolved that the Secretary of the corporation shall ensure that the adopted Stock Ownership Plan is properly recorded and filed in the corporate records. Additionally, the Secretary was directed to provide copies of the minutes of this meeting, along with a certified copy of the adopted Stock Ownership Plan, to all directors and relevant corporate officers. This concludes the Minutes of the Special Meeting wherein the Board of Directors of (Name of Corporation) formally adopted the Stock Ownership Plan under Section 1244 of the Internal Revenue Code. Alternative types of Maryland Minutes of Special Meeting of the Board of Directors of (Name of Corporation) to Adopt Stock Ownership Plan under Section 1244 of the Internal Revenue Code may include: 1. Maryland Minutes of Special Meeting of the Board of Directors to Amend an Existing Stock Ownership Plan under Section 1244 of the Internal Revenue Code 2. Maryland Minutes of Special Meeting of the Board of Directors to Revoke a Stock Ownership Plan under Section 1244 of the Internal Revenue Code 3. Maryland Minutes of Special Meeting of the Board of Directors to Transfer Stock Ownership Plan under Section 1244 of the Internal Revenue Code.
Maryland Minutes of Special Meeting of the Board of Directors of (Name of Corporation) to Adopt Stock Ownership Plan under Section 1244 of the Internal Revenue Code
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FAQ
1244 losses are allowed for NOL purposes without being limited by nonbusiness income. An annual limitation is imposed on the amount of Sec. 1244 ordinary loss that is deductible. The maximum deductible loss is $50,000 per year ($100,000 if a joint return is filed) (Sec.
1244(b)). Any loss in excess of the limit is a capital loss, subject to the capital loss rules. Thus, if the potential loss exceeds the $50,000 (or $100,000) limit, the stock should be disposed of in more than one year to maximize the ordinary loss treatment.
Form 4797, Sales of Business Property, is used to report an ordinary loss on the sale of Section 1244 stock or a loss resulting from the stock becoming worthless. Attach Form 4797 to Form 1040.
Section 1244 of the Internal Revenue Code is the small business stock provision enacted to allow shareholders of domestic small business corporations to deduct a loss on the disposal of such stock as an ordinary loss rather than as a capital loss, which is limited to only $3,000 annually.
Qualifying for Section 1244 StockThe stock must be issued by U.S. corporations and can be either a common or preferred stock.The corporation's aggregate capital must not have exceeded $1 million when the stock was issued and the corporation cannot derive more than 50% of its income from passive investments.More items...
The determination of whether stock qualifies as Section 1244 stock is made at the time of issuance. Section 1244 stock is common or preferred stock issued for money or other property by a domestic small business corporation (which can be a C or S corporation) that meets a gross receipts test.
Section 1244 of the Internal Revenue Code allows eligible shareholders of domestic small business corporations to deduct a loss on the disposal of such stock as an ordinary loss rather than a capital loss. Eligible investors include individuals, partnerships and LLCs taxed as partnerships.
HW: How are gains from the sale of § 1244 stock treated? losses? The general rule is that shareholders receive capital gain or loss treatment upon the sale or exchange of stock. However, it is possible to receive an ordinary loss deduction if the loss is sustained on small business stock (A§ 1244 stock).
To qualify under Section 1244, these five requirements must be adhered to:The stock must be acquired in exchange for cash or property contributed to the corporation.The corporation must issue the stock directly to the investors.The corporation must be an actual, operating company.More items...?