Final answer:
The monetary limit for a Section 1244 stock ordinary loss is $50,000 for an individual and $100,000 for a jointly filing married couple, allowing taxpayers to offset ordinary income upon qualifying conditions.
Step-by-step explanation:
The monetary limit for a Section 1244 stock ordinary loss is $50,000 for an individual taxpayer or $100,000 for a married couple filing jointly. If a taxpayer's Section 1244 stock becomes worthless or is sold at a loss, this provision allows for a portion of the loss to be treated as an ordinary loss rather than a capital loss. The benefit of treating it as an ordinary loss is that it can be used to offset other kinds of income, which could result in a more significant tax deduction than the capital loss treatment, which has more limitations on its deductibility.
For a taxpayer to claim a loss under Section 1244, the corporation that issued the stock must meet certain requirements, including being a domestic small business corporation and the stock must have been issued in exchange for money or property (not including stock and securities). It is essential to maintain proper documentation to substantiate eligibility for the loss treatment under Section 1244.