Kenneth David Perry and Linda Ruth Perry - Page 10

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          in determining the base for the section 1 income tax.  Section              
          165 limits the allowance of capital losses to what is allowed in            
          sections 1211 and 1212.                                                     
               Section 1211(b) allows, for individuals, capital losses only           
          to the extent of capital gains, plus no more than $3,000.6                  
               Section 1211(a) provides a much more limited capital loss              
          allowance for corporations.  Section 1212 provides for capital              
          loss carrybacks and carryovers; those rules are in general more             
          generous to corporations than to individuals.  Respondent noted             
          petitioners’ eligibility for capital loss carryovers treatment;             
          petitioners do not claim eligibility for carryback treatment.               
               As a result of the foregoing, although capital gains and               
          losses are thrown into the mix of income categories that result             

               6 Section 1211(b) provides as follows:                                 
                         SEC. 1211. LIMITATION ON CAPITAL                             
                         LOSSES.                                                      
                    *     *     *     *     *     *     *                             
                         (b) Other Taxpayers.--In the case                            
                         of a taxpayer other than a                                   
                         corporation, losses from sales or                            
                         exchanges of capital assets shall                            
                         be allowed only to the extent of                             
                         the gains from such sales or                                 
                         exchanges, plus (if such losses                              
                         exceed such gains) the lower of--                            
                         (1) $3,000 ($1,500 in the case                               
                         of a married individual filing a                             
                         a separate return), or                                       
                         (2) the excess of such losses                                
                         over such gains.                                             





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