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Short left petitioner's employ for approximately 1 year
during the second half of 1981 and early 1982. During Short's
absence, petitioner continued his commodity trading activity
through Merrill Lynch and expanded into trading bonds, stocks,
and other commodities futures contracts.
Also during Short's absence, petitioner continued to
maintain his accounts with Hunter, and, on December 31, 1981,
four of the March 1982 long positions were sold at $409, creating
a total loss in the amount of $110,400. Two of the contracts
were disposed of by sale, for which petitioners claimed a long-
term capital loss in the amount of $55,200 on their 1981 Federal
income tax return. Two of the contracts were disposed of by
"cancellation", for which petitioners claimed an ordinary loss
deduction in the amount of $55,302 on their 1981 Federal income
tax return.
To keep the number of long and short positions of the condor
position balanced after the December 31, 1981, disposal of four
long contracts, four short contracts of June 1982 gold were
purchased at $422.55 for petitioner's account with Hunter. This
purchase yielded a realized profit of $152,380. The December 31,
1981, liquidation of four short positions was treated by
petitioner as an "assignment" to a third party, and the gain was
treated as a $152,380 long-term capital gain on petitioners' tax
return.
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