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had been entered into. Leh v. Commissioner, supra (termination
of petroleum supply contract); Commissioner v. Pittston Co.,
supra (termination of exclusive coal purchase contract); General
Artists Corp. v. Commissioner, supra (cancellation of performance
contract); Commissioner v. Starr Bros., supra (termination of
exclusive pharmaceutical sales contract).
It seems obvious to us that the cancellations involved in
the above cases are fundamentally different from the
"cancellations" of forward contracts that are involved herein
where the "cancellations", lock in, settlement, or closing that
occurred are exactly what the parties contemplated when they
entered into the forward contracts (namely, Holly and AGS
contemplated that Holly would have the risk of price fluctuations
on each leg of the straddle from the day the straddle was first
opened until whatever day Holly chooses to lock in the gain or
loss). Holly received the benefit of that contract and now
becomes liable for the burden (namely, the loss incurred on the
legs Holly chose to close). Holly received exactly what it
contracted for. AGS did likewise. In this sense, the
transactions in question with respect to the loss legs do not
represent cancellations. They represent consummations. The
cases, therefore, involving unexpected cancellations of
commercial contracts are of limited applicability.
In a number of cases, taxpayers and respondent have sought
to invoke the "disappearing asset" theory, but that theory was
found to be inapplicable where a close scrutiny of the substance
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