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Loss from worthless 1244 Stock

Client invested $160K in a startup that was closed mid 2019.

All investment is doomed. I see that 1244 stock needs to be reported on form 4797 line 10, but I cannot figure how to enter the information to the form.

Anyone with specific instructions on how to "flow" the data to the 4797?

Do I start on Sch D and then make a selection?

The idea is that 1244 stock is allowing $100K (MFJ) / $50K (single) deduction in the year of loss versus a $3,000 capital loss. So it is a huge difference.

Instructions or link to instructions are appreciated. 



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2 Replies 2
Level 15

Provided all the conditions were met and the stock became worthless in 2019 (since closure may not always equate to stocks becoming worthless), here's what you should do.

  1. Under Sch D, click on the QuickZoom button for Capital Gain(Loss) Transaction Worksheet;
  2. Click on the Create new copy radio button and enter a description;
  3. Click on Create;
  4. Under Part II, Line 1, check the box for (f) Section 1244 stock; and
  5. Complete the relevant details on the screen.

$100k will flow to F.4797 as ordinary loss and the remainder will flow to F.8949/Sch D as LTCL.

Still an AllStar
Level 1

Okay.  That seems to work well on 2019 tax forms.  Now, the forms have changed and I cannot find where to limit the Ord Loss from sale of Section 1244 Stock.  The loss is $235,000...but, the Ordinary loss limitation is $100,000.  How/Where do I make that split on Proseries Forms?

Thank you!

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