Tier system.  We net Tier I first, then we go to Tier II.  This doesn’t result in any net number; rather, it’s just a labeling process.
a.     1231(a)(4)(C): Tier I.  Involuntary conversions of  1231(b) assets and LTK assets held in connection with a trade or business or for profit.
i.    If losses predominate in Tier I, we throw them out.
ii.    If Tier I gains equal or exceed losses, we carry them to Tier II.
b.     1231(a)(3)(A): Tier II.  Sales or exchanges of  1231(b) assets and condemnations of  1231(b) assets or long-term capital assets held in connection with a trade or business or for profit.