- 12 - 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) 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: the portion thereof which is a short-term capital loss carryover shall be carried over to the succeeding taxable year and treated as a short-term capital loss sustained in such succeeding taxable year, and the portion thereof which constitutes 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.] It follows that because short-term capital loss carryovers and long-term capital loss carryovers are treated as losses in the current taxable year, they are also losses for purposes of determining “net gain” in section 163(d)(4)(B)(ii)(I). Accordingly, we conclude as a matter of law that the term “net gain” for purposes of section 163(d)(4)(B)(ii)(I) means the excess, if any, of total gains over total losses, including capital loss carryovers, from the disposition of property held for investment.12 12 We note that respondent has adopted this view and has (continued...)Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
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