-20-
March 1981 Treasury bond contracts. On October 28, 1980, Tandrill
entered into another "spread of a spread" involving GNMA and
Treasury bond contracts: (a) It purchased 30 June 1981 GNMA
contracts and sold 30 March 1981 GNMA contracts; and (b) it
purchased 30 June 1981 Treasury bond contracts and sold 30
September 1981 Treasury bond contracts. The October 1980
transactions resulted in a $327,030 loss on the GNMA contracts and
a $368,280 loss on the Treasury bond contracts. This left Tandrill
with unrealized profits of $691,406.25 in its open positions.
Tandrill's open positions were liquidated in 1981.
Tandrill’s Liquidation
Tandrill ceased operations in 1981; at this time, its capital
had dwindled to approximately $10,000. Petitioner received only one
distribution from Tandrill, in the amount of $9,782, which
represented his proportionate share of Tandrill's net assets on the
1981 liquidation date.
Tandrill's Forms 1065
Peat Marwick’s New York office prepared Tandrill’s
partnership returns (Forms 1065) for 1979 and 1980.15
a. 1979
On its 1979 partnership return, Tandrill reported an ordinary
loss of $1,858,743 on Treasury bill options and claimed deductions
15 Petitioners introduced into the record Tandrill’s 1979
and 1980 yearend financial statements. However, they failed to
present evidence proving the reliability of such documents. We
have therefore not utilized these statements in making our
determination.
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