- 33 -
section 108(c) allows petitioners to take a net out-of-pocket
loss for 1982. The net out-of-pocket loss would represent the
amount by which petitioner's straddle losses during the subject
years exceeded his straddle gains during the subject years.
Respondent contends that petitioners are only entitled to offset
petitioner's straddle gains by straddle losses to the extent of
his straddle gains. See Ewing v. Commissioner, 91 T.C. at 421.
DEFRA Section 108(c) provides as follows:
(c) Net Loss Allowed.--If any loss with respect
to a position described in paragraphs (1) and (2) of
subsection (a) is not allowable as a deduction (after
applying subsections (a) and (b)), such loss shall be
allowed in determining the gain or loss from disposi-
tions of other positions in the straddle to the extent
required to accurately reflect the taxpayer's net gain
or loss from all positions in such straddle.
Further interpretation of DEFRA section 108(c) is provided
by section 1.165-13T, Q&A-3, Temporary Income Tax Regs., 49 Fed.
Reg. 33445 (Aug. 23, 1984), which states as follows:
Q-3. If a loss is disallowed in a taxable year
(year 1) because the transaction was not entered into
for profit, is the entire gain from the straddle
occurring in a later taxable year taxed?
A-3. No. Under Section 108(c) of the Act the
taxpayer is allowed to offset the gain in the subse-
quent taxable year by the amount of loss (including
expenses) disallowed in year 1.
This Court recently confronted this issue in Nolte v.
Commissioner, T.C. Memo. 1995-57, and held that DEFRA section
108(c) entitles taxpayers to offset straddle losses only to the
extent of straddle gains. The taxpayers in Nolte, like peti-
tioner, were involved in the Hunter program.
Page: Previous 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 NextLast modified: May 25, 2011