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prerequisite to the existence of net gain is that the taxpayer’s
gains exceed the taxpayer’s losses.
Black’s Law Dictionary (7th ed. 1999) defines the term “net
loss” as “The excess of all expenses and losses over all revenues
and gains.” By analogy, the natural, ordinary, and familiar
meaning of the term “net gain” is the excess of all gains over
all losses.10
As is relevant herein, the terms “gains” and “losses”
include short-term and long-term capital gains and short-term and
long-term capital losses, respectively. For purposes of
determining “net short-term capital gain”, the prior year’s
short-term capital loss that is carried forward to the current
taxable year under section 1212(b)(1)(A) is treated as a short-
term capital loss for such taxable year.11 Sec. 1.1222-1(b)(1),
Income Tax Regs. Likewise, for purposes of determining “net
10 See, e.g., similar definitions under sec. 1222(9) that
define “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 define “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”.
11 Sec. 1212(b)(1) provides in pertinent part: “If a
taxpayer other than a corporation has a net capital loss for any
taxable year--(A) the excess of the net short-term capital loss
over the net long-term capital gain for such year shall be a
short-term capital loss in the succeeding taxable year, and (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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Last modified: May 25, 2011