27
More than anything else, the investors wanted to stay
around, to be a part of the straddle transactions as they came to
their predictable, inevitable, intended, and planned closing. We
agree with the analysis set forth in our prior opinion in Stoller
v. Commissioner, 60 T.C.M. (CCH) at 1566, 1990 T.C.M. (P-H) at
90-3220 --
the substance of the alleged cancellation transactions [will
be determined] by looking to the entire spread arbitrage
transaction and the economic consequences sought by the
parties. * * * When * * * [the taxpayer] requested the
cancellation of a contract or series of contracts, it was
part of an ongoing straddle and was for the purpose of
changing Holly's window of risk. He did not want to
terminate Holly's straddle with AGS, he just wanted to
change the delivery date of one leg and accelerate the loss
to be recognized by Holly and its partners. * * * [Citation
omitted.]
Respectfully, we also believe that in Stoller v.
Commissioner, 994 F.2d at 858, the Court of Appeals for the
District of Columbia Circuit erred in its interpretation of the
1981 legislative history accompanying the addition of section
1234A to the Internal Revenue Code. Id. The legislative history
concerning section 1234A states the following:
Present Law
The definition of capital gains and losses in
section 1222 requires that there be a "sale or
exchange" of a capital asset. Court decisions have
interpreted this requirement to mean that when a
disposition is not a sale or exchange of a capital
asset, for example, a lapse, cancellation, or
abandonment, the disposition produces ordinary income
or loss. * * * [See Leh v. Commissioner, 260 F.2d 489
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