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gains over all losses.6 Therefore, we conclude as a matter of
law that the term “net gain” for purposes of section 163(d)(4)(B)
means the excess, if any, of total gains over total losses from
the disposition of property held for investment.7
3. Capital Gains and Losses
Sections 1201 through 1223 generally define capital gains
and losses under Subtitle A, Income Taxes, unless otherwise
indicated.8 Accordingly, we turn to sections 1222 and 1212 to
define the term “net capital gain”.
Section 1222(11) defines the term “net capital gain” as “the
excess of the net long-term capital gain for the taxable year
over the net short-term capital loss for such year.” (Emphasis
added.) The phrase “long-term” applies to the category of gains
and losses arising from the sale or exchange of capital assets
held for more than 1 year; the phrase “short-term” applies to the
category of gains and losses arising from the sale or exchange of
6See, e.g., similar definitions under sec. 1222(9) that
defines “capital gain net income” as “the excess of the gains
from the sales or exchanges of capital assets over the losses
from such sales or exchanges”, and under sec. 1.469-
2T(e)(3)(ii)(E)(3), Temporary Income Tax Regs., 53 Fed. Reg. 5719
(Feb. 25, 1988), that defines “net gain” for purposes of that
section as “the amount by which the gains from the sale of all of
the property * * * exceed the losses (if any) from such sale”.
7We note that respondent has adopted this view and has
utilized this definition on Form 4952, General Instructions, for
Line 4b.
8Subtitle A includes sec. 163.
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