- 28 -
The Gordons claimed that net trading loss as an ordinary loss in
their 1986 return and claimed a net operating loss deduction of
$268,318 in their 1988 return that is attributable to the carry-
over of that loss.
Mr. Gordon contends, and respondent disputes, that the
Gordons are entitled to the claimed 1988 NOL deduction because
the net trading loss that Mr. Gordon sustained during 1986 is an
ordinary, and not a capital, loss.11
To support his contention that his 1986 net trading loss is
an ordinary loss, Mr. Gordon asserts:
[As a market maker, I was] trading for profitable
opportunities. * * * But at the same times [sic], * * *
[I had] a dual purpose and dual function.
* * * * * * *
* * * As a dealer, in providing a service to the
public, in making a two-sided market and being obli-
gated to participate on both side [sic] of every public
order, taking on this inventory so that I would be able
to resell it to the public and provide liquidity in the
derivative product, * * * I provided a service to the
public * * *
* * * * * * *
* * * As a market-make [sic], [I was] providing a
11 In presenting their respective arguments on whether the
Gordons are entitled to the claimed 1988 NOL deduction, Mr.
Gordon and respondent focus on Mr. Gordon's 1986 net trading
loss, and not on the individual components of that loss. Al-
though the applicable sections of the Code address those individ-
ual components, for convenience, we, like the parties, shall
focus on Mr. Gordon's 1986 net trading loss since it is immate-
rial to our resolution of the issue presented whether we address
that loss or its individual components.
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