TAX FILE MEMORANDUMJuly $24,2024$FROM: Suzy SmithSUBJECT: Mike SanchezToday I talked to Mike Sanchez regarding his sale of stock that was issued to his brother, Paul, pursuant to $1244.$ Paul paid $$40,000$ for the stock three years ago and gave the stock to his brother, Mike, a few months after acquiring it$.$ Mike sold the stock in the current tax year for $$25,000.$At issue: May a donee of stock in a corporation that

qualifiesdoes not qualify

as a small business corporation under $1244$ take

a capitalan ordinary

loss deduction pursuant to $1244?$Conclusion:

Any ownerOnly the original holder

of $1244$ stock qualifies for

a capitalan ordinary

loss.