Robert G. Leslie and Marilyn B. Leslie - Page 5

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          behalf of petitioners by Hunter.  Petitioners did not engage in             
          the transactions as dealers.                                                
          Trading in Commodities Futures in General                                   
               A gold futures contract1 is an agreement to either deliver             
          (a short position2) or receive (a long position3) a specified               
          amount of gold during a designated month at a price negotiated              
          when the contract is made.  The futures contract is ultimately              
          fulfilled when the commodity bought is delivered to the buyer by            
          the seller or when the contract is offset.  Less then 5 percent             
          of all futures contracts actually result in the delivery of the             
          underlying commodity.  Instead, most futures contracts are offset           
          rather than being executed by delivery.  Ewing v. Commissioner,             
          supra at 400.  An offset is the acquisition of an offsetting                
          contract of purchase or sale of the same quantity of the                    
               A gold spread consists of a long position and a short                  
          position, with each position having a different delivery date.              
          Each of the two positions constitutes a simple spread, often                

          1Since modern gold futures trading began in 1974, gold                      
          futures have been traded on four domestic exchanges:  (1) The               
          Chicago Board of Trade (CBOE); (2) the International Monetary               
          Market (IMM), which is associated with the Chicago Mercantile               
          Exchange; (3) the Commodity Exchange, Inc. (COMEX), and (4) the             
          MidAmerica Commodity Exchange.  The dominant exchange is COMEX.             
          2 A short position is held by a person who has sold one or                  
          more futures contracts without having previously bought them.               
          3A long position is held by a person who has bought and                     
          holds one or more futures contracts.                                        

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