- 34 -
such risks were offset by the options that he claims were being
held for hedging purposes); (3) that he held any of the options
in question for purposes of hedging property, any loss with
respect to which would be an ordinary loss in his hands;15 or (4)
what portion, if any, of his 1986 net trading loss was attribut-
able to such hedging transactions. On the record before us, we
find that Mr. Gordon has failed to establish that the hedging
exception in section 1256(f)(3)(B) applies to any portion of his
1986 net trading loss.
Having found that, pursuant to section 1256(f)(3)(A), Mr.
Gordon’s 1986 net trading loss is treated as a loss from the sale
or exchange of a capital asset and that Mr. Gordon has failed to
establish that he held the options that generated that loss for
the purposes specified in section 1256(f)(3)(B), we sustain
respondent's determinations (1) that, pursuant to section
1256(a)(3), 40 percent of that loss is treated as a short-term
capital loss and the remaining 60 percent is treated as a long-
term capital loss and (2) that petitioners are not entitled to
the claimed 1988 NOL deduction.
15 We note that, to the extent that Mr. Gordon may have used
certain of the options in question to hedge certain other options
that are also in question, he would not be entitled under sec.
1256(f)(3)(B) to ordinary loss treatment for any loss from the
options that he may have used in such hedging. That is because
any loss with respect to the options that were being hedged would
not constitute ordinary loss. See sec. 1256(f)(3)(A).
Page: Previous 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 NextLast modified: May 25, 2011