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Finally, the alternative liquidation techniques (i.e.,
cancellations and assignments) developed by Avram Salkin were
used by Hunter to sell prospective investors on a scheme to
achieve tax avoidance. Id. Specifically, the "cancellation"
technique was devised so that its proponents could claim ordinary
loss treatment rather than capital loss treatment. The
"assignment" procedure was contrived so that Hunter investors
could characterize straddle gains as long-term capital gains
instead of short-term capital gains. However, to utilize these
techniques and obtain their purported tax benefits, petitioner
paid more in commissions and fees than he would have incurred had
he liquidated his futures contract the usual way, by means of
offset. Id. at 400, 419.
For example, under Hunter's "Current Policies and Fees"
statement, petitioner was charged a fee of $15,520.14 for
canceling 175 gold futures contracts on December 10, 1980. Had
petitioner offset his 175 gold contracts instead of "canceling"
those positions, his fee would have only been $1,750. The Court
believes that petitioner was willing to pay substantially more
fees to obtain ordinary loss deductions in the amounts of
$1,506,000 and $55,200 for 1980 and 1981, respectively, espe-
cially since petitioners deducted the fees on their 1980 and 1981
Federal income tax returns.
For the reasons stated above, we hold that petitioners'
motives in entering into these transactions, despite their
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