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Form 8949 Code S: Section 1244 Stock Loss (2025)

Updated October 17, 2026. Quick answer: Code S goes in column (f) of Form 8949 when a small business (section 1244) stock loss is more than the maximum that can be treated as an ordinary loss. The ordinary part is claimed on Form 4797. On Form 8949 you enter the whole sale and basis and put the Form 4797 loss in column (g) as a positive number.

What code S means

The column (f) table describes the situation: “You had a loss from the sale, exchange, or worthlessness of small business (section 1244) stock and the total loss is more than the maximum amount that can be treated as an ordinary loss”. It points to the Schedule D instructions: “See Small Business (Section 1244) Stock in the Schedule D (Form 1040) instructions.”

Publication 550 explains the split: “Subject to the limitations discussed under Ordinary loss limit, later, you can deduct as an ordinary loss, rather than as a capital loss, a loss on the sale, trade, or worthlessness of section 1244 stock.” It says where the ordinary part goes: “Report the loss on Form 4797, line 10.” And for the rest: “Any loss in excess of the amounts described in Ordinary loss limit, later, should be reported on Form 8949.”

The ordinary loss maximum

The Schedule D instructions state the limit in the same passage that tells you when Form 8949 is needed: “However, if the total loss is more than the maximum amount that can be treated as an ordinary loss for the year ($50,000 or, on a joint return, $100,000), also report the transaction on Form 8949 as follows.”

Publication 550 gives a joint return example: “If your loss is $110,000 and your spouse has no loss, you can deduct $100,000 as an ordinary loss on a joint return.” “The remaining $10,000 is a capital loss.” What counts as section 1244 stock is also in that publication; see the QSBS requirements page for the separate small business stock exclusion rules.

What to enter in each column

The Schedule D instructions list the steps. Column (a) takes the words “Capital portion of section 1244 stock loss”. For the amounts: “In column (d), enter the entire sales price of the stock sold.” “In column (e), enter the entire basis of the stock sold.” Then column (f) takes the letter S, and for column (g) “In column (g), enter the loss you claimed on Form 4797 for this transaction. Enter it as a positive number.” Column (h) follows its usual rule.

The instructions also say “Report the transaction in Part I or Part II of Form 8949 (depending on how long you held the stock) with the appropriate box checked.” Form 8949 boxes A to L explains how the box is chosen.

The IRS example

The Schedule D instructions work an example: “You sold section 1244 stock for $1,000. Your basis was $60,000.” “You can claim $50,000 of your loss as an ordinary loss on Form 4797.” On Form 8949, “Enter $1,000 on Form 8949, Part II, column (d). Enter $60,000 in column (e).” The $50,000 ordinary loss goes in column (g), and the result is “In column (h), enter ($9,000)”. That is the capital part left after the ordinary loss was claimed on Form 4797.

Where it goes next

Column (h) is figured one row at a time. The instructions say “Figure gain (or loss) on each row. First, subtract the cost or other basis in column (e) from the proceeds (sales price) in column (d). Then take into account any adjustments in column (g).” The form’s own column heading says the same: “Subtract column (e) from column (d) and combine the result with column (g).”

The rows then roll up to Schedule D. The instructions say “Include on your Schedule D the totals from all your Parts I and II.” and “Complete Form 8949 before you complete lines 1b, 2, 3, 8b, 9, or 10 of Schedule D.” The overview is on Form 8949 instructions.

Edition and line numbers

This page reads the 2025 Form 8949 and its 2025 instructions, along with the 2025 Instructions for Schedule D (Form 1040) and the 2025-returns edition of Publication 550, the current files irs.gov served on 2026-10-17. They are the forms for the tax year 2025 return, filed in 2026. Check the tax year printed on the form you are filling in and use the column letters and codes on that year’s form, because a different year’s form can word its columns and codes differently.

Common mistakes

  • Entering the Form 4797 loss as a negative number. The instruction is “Enter it as a positive number.”
  • Entering only the excess loss in columns (d) and (e). The instructions say to enter “the entire sales price of the stock sold.” and “the entire basis of the stock sold.”
  • Putting the whole loss on Form 8949. Publication 550 says “Report the loss on Form 4797, line 10.” for the ordinary part.

Related: QSBS qualification requirements, Schedule D, Capital loss harvest helper, and Form 8949 instructions.

Sources

Read from the IRS documents linked above on October 17, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.

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