26 CFR §1.1244(b)-1 — (b)-1 Annual limitation.

1. (a)In general. Subsection (b) of section 1244 imposes a limitation on the aggregate amount of loss that for any taxable year may be treated as an ordinary loss by a taxpayer by reason of that section. In the case of a partnership, the limitation is determined separately as to each partner. Any amount of loss in excess of the applicable limitation is treated as loss from the sale or exchange of a capital asset.
2. (b)Amount of loss
   1. (1)Taxable years beginning after December 31, 1978. For any taxable year beginning after December 31, 1978, the maximum amount that may be treated as an ordinary loss under section 1244 is:
      1. (i)$50,000, or
      2. (ii)$100,000, if a husband and wife file a joint return under section 6013.
   2. (2)Taxable years ending before November 6, 1978. For any taxable year ending before November 6, 1978, the maximum amount that may be treated as an ordinary loss under section 1244 is:
      1. (i)$25,000 or
      2. (ii)$50,000, if a husband and wife file a joint return under section 6013.
   3. (3)Taxable years including November 6, 1978. For a taxable year including November 6, 1978, the maximum amount that may be treated as ordinary loss under section 1244 is the sum of:
      1. (i)The amount calculated by applying the limitations described in subparagraph (1) of this paragraph (b) to the amount of loss, if any, sustained during the taxable year on post-November 1978 stock, plus
      2. (ii)The amount calculated by applying the limitations described in subparagraph (2) of this paragraph (b) to the amount of loss, if any, sustained during the taxable year on pre-November 1978 stock,
   4. (4)Examples. The provisions of this section may be illustrated by the following examples: