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Mr. Gordon and Ms. Gordon. In our Opinion, we addressed Mr.
Gordon's contention that the Court should reject respondent's
determination that he and Ms. Gordon (petitioners) are not
entitled to the net operating loss deduction for 1988 (claimed
1988 NOL deduction), which petitioners claimed in the joint
Federal income tax return (return) that they filed for that year
and which is attributable to an alleged net operating loss
carryover from their taxable year 1986.3 Resolution of that
issue turned on whether a net trading loss that Mr. Gordon
sustained from his activities as an options market maker during
1986 (1986 net trading loss) constituted an ordinary loss, as Mr.
Gordon contended, or a capital loss, as respondent contended. On
the record before us, we found that Mr. Gordon failed to show
(1) that the 1986 net trading loss constituted a capital loss and
(2) that petitioners are entitled to the claimed 1988 NOL deduc-
tion. In so holding, we found on the record presented to us (1)
that pursuant to section 1256(f)(3)(A),4 the 1986 net trading
loss is treated as a loss from the sale or exchange of a capital
asset and (2) that Mr. Gordon failed to establish that the
hedging exception in section 1256(f)(3)(B) applies to any portion
of his 1986 net trading loss.
3 Ms. Gordon did not contend that she and Mr. Gordon are en-
titled to the claimed 1988 NOL deduction; instead she agreed to
be bound by the Court's holding on that issue.
4 All section references are to the Internal Revenue Code in
effect for the years at issue.
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