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requires only that any gain or loss with respect to a section
1256 contract is to be treated as short-term capital gain or loss
to the extent of 40 percent of such gain or loss and as long-term
capital gain or loss to the extent of 60 percent of such gain or
loss. Indeed, section 1256(f)(2) provides that section
1256(a)(3) is not to apply to any gain or loss which, but for
such paragraph, would be ordinary income or loss.
We have found on the instant record that, pursuant to
section 1256(f)(3)(A), Mr. Gordon's 1986 trading loss is treated
as a loss from the sale or exchange of a capital asset and that
Mr. Gordon failed to establish that the hedging exception in
section 1256(f)(3)(B) applies to any portion of that loss. Our
latter finding does not necessarily mean that Mr. Gordon did not
hold any of the options that generated his 1986 net trading loss
for the purposes specified in section 1256(f)(3)(B). It means
only that although Mr. Gordon claims that he so held most of
those options, the evidence that he presented did not persuade us
that he did. In contrast, Ms. Gordon does not even claim that
Mr. Gordon did not hold the options in question for the purposes
specified in section 1256(f)(3)(B), let alone that there was no
substantial argument that can be made that he so held any of
those options. Ms. Gordon could have developed the record in
order to attempt to establish that Mr. Gordon did not hold the
options that generated his 1986 net trading loss for the purposes
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