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return on investment, and that tax benefits were purely coinci-
dental. We disagree.
This Court in Ewing v. Commissioner, 91 T.C. 396 (1988),
stated that the phrase "entered into for profit" as used in DEFRA
section 108(a) is to be interpreted by reference to the standard
applied under section 165(c)(2). Ewing v. Commissioner, supra at
417. The Court in Ewing used the guidelines provided in Fox v.
Commissioner, 82 T.C. 1001 (1984), to determine whether the
Hunter gold straddle transactions were entered into primarily for
profit. Id.
In Fox v. Commissioner, supra at 1021, this Court concluded
that section 165(c)(2) requires that profit be the primary motive
if a loss from a straddle transaction is to be deductible. The
Court stated that profit need not be the sole motive for engaging
in a straddle transaction, but that a mere incidental profit
motive would be insufficient. Id. at 1019 (citing Ewing v.
Commissioner, 20 T.C. 216, 233 (1953), affd. 213 F.2d 438 (2d
Cir. 1954)). To determine whether a straddle transaction was
entered into for profit, Fox provides the following guidelines:
(1) The ultimate issue is profit motive and not profit
potential. However, profit potential is a relevant factor to be
considered in determining profit motive.
(2) Profit motive refers to economic profit independent of
tax savings.
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