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cooperative enterprise of a cooperative. Of course, this
argument is contrary to Rev. Rul. 74-24, supra, and Rev.
Rul. 71-439, supra, in which the Commissioner ruled that
capital gains recognized by a cooperative pursuant to an
election under section 631(a) are properly classified as
patronage income. See Rev. Rul. 74-24, supra; Rev. Rul.
71-439, supra.
According to respondent, under the per se rule set
forth in section 1.1382-3(c)(2), all capital gains and
losses must be classified as nonpatronage. This includes
not only gains and losses realized from the sale or other
disposition of capital assets, as defined by section 1221,
but also gains and losses from the sale or other disposi-
tion of “property used in the trade or business”, as
defined by section 1231(b). Section 1231 governs the tax
consequences of gains and losses realized from the
disposition of depreciable property used in a trade or
business.
Generally, the gains and losses from the sale or
exchange of section 1231 assets that are recognized during
the taxable year are netted together. See sec. 1231(a).
If the gains exceed the losses for the taxable year, then
all of the gains and losses are treated as long-term
capital gains and losses. See sec. 1231(a)(1). If the
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