Section 12 Capital Gain or Loss and I.R.C. 1202 Exclusion

• Library: Bus Trans 2005

In most situations, the stock of a closely held corporation will be a capital asset under I.R.C. § 1221. Gain or loss realized on the sale of the stock will be capital in character. Exceptions to the general rule of capital treatment are discussed in §§10.15–10.19 below.

If the stock has been held for less than 12 months at the date of sale, the gain will be short-term capital gain and taxed as ordinary income. If the stock has been held for more than 12 months, any gain realized will be long-term capital...