CH. 1—NORMAL TAXES AND SURTAXES
t3^1.
.YlwqoT PART II—TREATMENT OF CAPITAL LOSSES ,.;, Sec. 1211. Limitation on capital losses. ' Sec. 1212. Capital loss carryover. SEC. 1211. LIMITATION ON CAPITAL LOSSES. (a) CORPORATIONS.—In the case of a corporation, losses from sales or exchanges of capital assets shall be allowed only to the extent of gains from such sales or exchanges. (b) OTHER T A X P A Y E R S. — I n 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 the taxable income of the taxpayer or $1,000, whichever is smaller. For purposes of this subsection, taxable income shall be computed without regard to gains or losses from sales or exchanges of capital assets and without regard to the deductions provided in section 151 (relating to personal exemptions) or any deduction in lieu thereof. If the taxpayer elects to pay the optional tax imposed by section 3, "taxable income" as used in this subsection shall be read as "adjusted gross income". SEC. 1212. CAPITAL LOSS CARRYOVER. If for any taxable year the taxpayer has a net capital loss, the amount thereof shall be a short-term capital loss in each of the 5 succeeding taxable years to the extent that such amount exceeds the total of any net capital gains of any taxable years intervening between the taxable year in which the net capital loss arose and such succeeding taxable year. For purposes of this section, a net capital gain shall be computed without regard to such net capital loss or to any net capital losses arising in any such intervening taxable years, and a net capital loss for a taxable year beginning before October 20, 1951, shall be determined under the applicable law relating to the computation of capital gains and losses in effect before such date.
PART III—GENERAL RULES FOR DETERMINING CAPITAL GAINS AND LOSSES (cr ^,
Sec. 1221. Capital asset defined. Sec. 1222. Other items relating to capital gains and losses. Sec. 1223. Holding period of property.
SEC. 1221. CAPITAL ASSET DEFINED.
For purposes of this subtitle, the term "capital asset" means property held by the taxpayer (whether or not connected with his trade or business), but does not include— ' (1) stock in trade of the taxpayer or other property of a kind " which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year, or property held by the taxpayer primarily for sale to customers in the ordinary course of I his trade or business; ' (2) property, used in his trade or business, of a character which is subject to the allowance for depreciation provided in section 167, or real property used in his trade or business; ^ (3) a copyright, a literary, musical, or artistic composition, or similar property, held by— ^ ^ §1221(3)
�
