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a loss in the amount of $797,500. Petitioner reported the loss
as a long-term capital loss. Twenty-five short June 1982
contracts were liquidated by assignment at a gain in the amount
of $1,062,125. Petitioner treated the gain as a long-term
capital gain.
Petitioner liquidated his final positions with Hunter on
May 26, 1982. This resulted in an offset loss of $2,814,700 from
the remaining long contracts and a gain from the assignment of
the remaining short contracts of $3,315,550. The loss was
treated by petitioner as a long-term capital loss, and the gain
was treated as a long-term capital gain.
Petitioners claimed on their 1982 joint Federal income tax
returns that the results of their 1982 Hunter trades were net
long-term capital gains from the assignment and offset of gold
futures contracts in the amount of $1,172,950.
OPINION
Losses on Straddle Transactions
The primary issue in this case is whether petitioners are
entitled to deduct losses on the Hunter straddle transactions as
claimed on their Federal income tax returns for the taxable years
1980, 1981, and 1982. Resolution of the issue turns on the
effect of section 108(a) of the Deficit Reduction Act of 1984
(DEFRA), Pub. L. 98-369, 98 Stat. 494, 630, as amended by section
1808(d) of the Tax Reform Act of 1986, Pub. L. 99-514, 100 Stat.
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