[Code of Federal Regulations]
[Title 26, Volume 11]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.1244(e)-1]

[Page 349]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.1244(e)-1  Records to be kept.

    (a) By the corporation--(1) Mandatory records. A plan to issue pre-
November 1978 stock must appear upon the records of the corporation. Any 
designation of post-November 1978 stock under Sec. 1.1244(c)-2(b)(2) 
also must appear upon the records of the corporation.
    (2) Discretionary records. In order to substantiate an ordinary loss 
deduction claimed by its shareholders, the corporation should maintain 
records showing the following:
    (i) The persons to whom stock was issued, the date of issuance to 
these persons, and a description of the amount and type of consideration 
received from each;
    (ii) If the consideration received is property, the basis in the 
hands of the shareholder and the fair market value of the property when 
received by the corporation;
    (iii) The amount of money and the basis in the hands of the 
corporation of other property received for its stock, as a contribution 
to capital, and as paid-in surplus;
    (iv) Financial statements of the corporation, such as its income tax 
returns, that identify the source of the gross receipt of the 
corporation for the period consisting of the five most recent taxable 
years of the corporation, or, if the corporation has not been in 
existence for 5 taxable years, for the period of the corporation's 
existence;
    (v) Information relating to any tax-free stock dividend made with 
respect to section 1244 stock and any reorganization in which stock is 
transferred by the corporation in exchange for section 1244 stock; and
    (vi) With respect to pre-November 1978 stock;
    (A) Which certificates represent stock issued under the plan;
    (B) The amount of money and the basis in the hands of the 
corporation of other property received after June 30, 1958, and before 
the adoption of the plan, for its stock, as a contribution to capital, 
and as paid-in surplus; and
    (C) The equity capital of the corporation on the date of adoption of 
the plan.
    (b) By the taxpayer. A person who claims an ordinary loss with 
respect to stock under section 1244 must have records sufficient to 
establish that the taxpayer is entitled to the loss and satisfies the 
requirements of section 1244. See also section 6001, requiring records 
to be maintained.

In addition, a person who owns section 1244 stock in a corporation shall 
maintain records sufficient to distinguish such stock from any other 
stock he may own in the corporation.

[T.D. 6495, 25 FR 9681, Oct. 8, 1960, as amended by T.D. 7779, 46 FR 
29473, June 2, 1981; 46 FR 31881, June 18, 1981; T.D. 8594, 60 FR 20898, 
Apr. 28, 1995]