Robert G. Leslie and Marilyn B. Leslie - Page 24

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          2817.  Hereinafter, our references to "DEFRA section 108" are to            
          that section as amended, unless otherwise stated.                           
               DEFRA section 108(a) provides as follows:                              
                    (a) General Rule. -- For purposes of the Internal                 
               Revenue Code of 1954, in the case of any disposition of                
               1 or more positions--                                                  
                         (1) which were entered into before 1982 and                  
                    form part of a straddle, and                                      
                         (2) to which the amendments by title V of the                
                    Economic Recovery Tax Act of 1981 do not apply,                   
               any loss from such disposition shall be allowed for the                
               taxable year of the disposition if such loss is                        
               incurred in a trade or business, or if such loss is                    
               incurred in a transaction entered into for profit                      
               though not connected with a trade or business.                         
               By notice of deficiency, respondent determined that                    
          petitioner's straddle losses are not deductible under section               
          165(c)(2) because the transactions were not entered into for                
          profit.  Petitioners contend that their entire course of conduct            
          before the investment, during the commodity trading with Hunter,            
          and after the initial Hunter investment through the time of the             
          investment with Merrill Lynch all reflect that petitioner's gold            
          straddle transactions were entered into for profit.                         
               Petitioners contend that all of petitioner's investment and            
          commodity trades were consistent with his long-standing invest-             
          ment history.  They argue that petitioner's commodity spread                
          trading was motivated primarily by petitioner's desire to find              
          investments with a modicum of risk in exchange for a large cash             

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