Final answer:
While a § 1244 stock allows for a loss to be treated as an ordinary loss, which has distinct tax advantages, there are limits and conditions that apply.
Single filers can treat up to $50,000 as ordinary loss, and married filers filing jointly can treat up to $100,000 as such, with excess losses being treated as capital losses.
Step-by-step explanation:
The question pertains to the tax treatment of losses on the sale of § 1244 stock, which is a reference to the Internal Revenue Code (IRC). If a taxpayer incurs a loss from selling their § 1244 stock, a provision allows a portion, or potentially all, of that loss to be treated as an ordinary loss rather than a capital loss. This is beneficial because ordinary losses can be used to offset other types of income, while capital losses are typically limited in their deductibility against other income types.
However, it's important to note that certain conditions must be met for the stock to qualify as § 1244 stock, and there are also limits on the amount of loss that can be treated as ordinary. Specifically, for single filers, up to $50,000 of the loss on § 1244 stock can be treated as ordinary loss, and for married filers filing jointly, this limit is $100,000. Amounts exceeding these limits are considered capital losses.
In conclusion, it is not entirely accurate to say "all" of the loss will be ordinary loss without considering the limits and conditions specified by the IRC regarding § 1244 stock.