### Question
How is the term net underlying long-term capital gain defined?


### Answer
The term **net underlying long-term capital gain** is defined in *26 U.S.C. § 1260* as the following:

> the aggregate net capital gain that the taxpayer would have had if—


(1) the financial asset had been acquired for fair market value on the date such transaction was opened and sold for fair market value on the date such transaction was closed, and


(2) only gains and losses that would have resulted from the deemed ownership under paragraph (1) were taken into account

#### Citation:
  - *26 U.S.C. § 1260*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter P-Capital Gains and Losses > PART IV-SPECIAL RULES FOR DETERMINING CAPITAL GAINS AND LOSSES**

