In the case of a small business investment company operating under the Small Business Investment Act of 1958, if—
(1) a loss is on stock received pursuant to the conversion privilege of convertible debentures acquired pursuant to section 304 of the Small Business Investment Act of 1958, and
(2) such loss would (but for this section) be a loss from the sale or exchange of a capital asset,
then such loss shall be treated as an ordinary loss.
(Added Pub. L. 85–866, title I, §57(a), Sept. 2, 1958, 72 Stat. 1645; amended Pub. L. 91–172, title IV, §433(b), Dec. 30, 1969, 83 Stat. 624; Pub. L. 94–455, title XIX, §1901(b)(3)(F), Oct. 4, 1976, 90 Stat. 1793.)
The Small Business Investment Act of 1958, referred to in text, is Pub. L. 85–699, Aug. 21, 1958, 72 Stat. 689, as amended, which is classified principally to chapter 14B (§661 et seq.) of Title 15, Commerce and Trade. Section 304 of the Small Business Investment Act of 1958, is classified to section 684 of Title 15. For complete classification of this Act to the Code, see Short Title note set out under section 661 of Title 15 and Tables.
1976—Pub. L. 94–455 substituted "an ordinary loss" for "a loss from the sale or exchange of property which is not a capital asset".
1969—Par. (1). Pub. L. 91–172 substituted "stock received pursuant to the conversion privilege of convertible debentures" for "convertible debentures (including stock received pursuant to the conversion privilege)".
Amendment by Pub. L. 94–455 applicable with respect to taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94–455, set out as a note under section 2 of this title.
Amendment by Pub. L. 91–172 applicable to taxable years beginning after July 11, 1969, see section 433(d) of Pub. L. 91–172, set out as a note under section 582 of this title.
Section applicable with respect to taxable years beginning after Sept. 2, 1958, see section 57(d) of Pub. L. 85–866, set out as an Effective Date of 1958 Amendment note under section 243 of this title.
| § 1.1243-1 | Loss of small business investment company |
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