Beverly Gordon - Page 10

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          constituted an ordinary, and not a capital, loss because of his             
          hedging activities and his apparent belief that he had introduced           
          sufficient evidence to establish that he held the options that              
          generated the 1986 net trading loss for the purposes specified in           
          section 1256(f)(3)(B).                                                      
               Ms. Gordon further contends that even if Mr. Gordon had                
          claimed that he held most of the options that generated the 1986            
          net trading loss to hedge the risks that were associated with               
          other property that he owned, Mr. Gordon was not a "dealer in               
          securities".7  Thus, according to Ms. Gordon, "as a matter of               
          law" under general income tax rules, any loss with respect to any           
          such hedged property would not have been an ordinary loss in Mr.            
          Gordon's hands, and, consequently, regardless of the nature of              
          his hedging activities, Mr. Gordon could not have fit within the            
          hedging exception in section 1256(f)(3)(B).  In support of her              
          position, Ms. Gordon points to the following testimony elicited             
          by respondent's counsel on respondent's cross-examination of Mr.            
                    Q   During the tax year 1986, while you were on                   
               the floor of the American Stock Exchange, * * * were                   

          7  Although Ms. Gordon does not provide an explanation in her               
          motion as to what she means by a "dealer in securities", we                 
          assume that she is referring to an individual who holds securi-             
          ties, other than the type of options that were held by Mr. Gordon           
          during 1986, that are excluded from the definition of a capital             
          asset under sec. 1221(1).  Our use herein of the phrase "dealer             
          in securities" shall have the same meaning as we assume Ms.                 
          Gordon intended by the use of that phrase.                                  

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