Research says AI is wrong:
Actual clauses from regulations:
1) A corporation, trust, or estate is not entitled to ordinary loss treatment under section 1244 regardless of how the stock was acquired.(1.1244(a)-1(b)(2)
2) the maximum amount that may be treated as an ordinary loss under section 1244 is: (i) $50,000, or (ii) $100,000, if a husband and wife file a joint return under section 6013. (1.1244(b)-1(b)
3) Stock issued in consideration for cancellation of indebtedness of the corporation shall be considered issued in exchange for money or other property unless such indebtedness is evidenced by a security, or arises out of the performance of personal services. 1.1244(c)-1(d)(1)
4) stock will not qualify under section 1244, if 50 percent or more of the gross receipts of the corporation, for the period consisting of the five most recent taxable years of the corporation ending before the date the loss on such stock is sustained by the shareholders, is derived from royalties, rents, dividends, interest, annuities, and sales or exchanges of stock or securities. (1.1244(c)-1(e)(1)(i)(a)). The requirement of subparagraph (1) of this paragraph need not be satisfied if for the applicable period the aggregate amount of deductions allowed to the corporation exceeds the aggregate amount of its gross income. But for this purpose the deductions allowed by section 172, relating to the net operating loss deduction, and by sections 242, 243, 244, and 245, relating to certain special deductions for corporations, shall not be taken into account. (1.1244(c)-1(e)(2))
5) Amount received by corporation for stock. Capital receipts of a small business corporation may not exceed $1,000,000. For purposes of this paragraph the term capital receipts means the aggregate dollar amount received by the corporation for its stock, as a contribution to capital, and as paid-in surplus. (1.1244(c)-2(b))