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capital assets held for 1 year or less. Sec. 1.1222-1(a), Income
Tax Regs; see also sec. 1222(1) through (4). The term net short-
or long-term capital gain means the excess of the short- or long-
term gains over the short- or long-term losses for a given tax
year, as the case may be. Sec. 1222(5), (7). The term net
short- or long-term capital loss means the excess of the short-
or long-term losses over the short- or long-term gains for a
given tax year, as the case may be. Secs. 1222(6), (8).
In the definition of “net long-term capital gain”, the prior
year’s long-term capital loss that is carried forward to the
current taxable year under section 1212(b)(1)(B)9 is treated as a
long-term capital loss for such taxable year. Sec. 1.1222-
1(b)(2), Income Tax Regs. Furthermore, the pertinent parts of
the regulations provide:
[A] long-term capital loss carryover shall be carried
over to the succeeding taxable year and treated as a
long-term capital loss sustained in such succeeding
taxable year. The carryovers are included in the
succeeding taxable year in the determination of the
amount of the short-term capital loss, the net short-
term capital gain or loss, the long-term capital loss,
and the net long-term capital gain or loss in such
year, the net capital loss in such year, and the
capital loss carryovers from such year. [Sec. 1.1212-
1(b)(1), Income Tax Regs.; emphasis added.]
9Sec. 1212(b)(1) provides in pertinent part: “If a taxpayer
other than a corporation has a net capital loss for any taxable
year, * * * (B) the excess of the net long-term capital loss over
the net short-term capital gain for such year shall be a long-
term capital loss in the succeeding taxable year.”
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