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parties earlier agree to settle up, the settlement date, not the
offset date, is the date that gains and losses are realized with
respect to forward contracts settled by offset. In Hoover, there
were 13 forward contracts in issue that were settled by entering
into inverse forward contracts. Of that number, a debit or
credit (settlement payment) was made after the offset date, on
the settlement date, in nine situations. In one situation, a
settlement payment was made after the offset date, but in advance
of the settlement date, and, in one situation, a settlement
payment was made after the settlement date. In two situations, a
settlement payment was made on the offset date. In one
situation, it is clear that the settlement payment was made in a
year beginning after the offset date. Nothing indicates that the
taxpayer did not report, and both the Commissioner and the Court
accepted, the date of the settlement payment as the date that
gain or loss was realized. Indeed, the Court calculated the
holding period with respect to those transactions from the offset
date; those calculations seem to belie any assertion that the
offset date is the date of realization. Hoover Co. v.
Commissioner, supra at 250-251.
C. Straddle
A person who has entered into either a RFC or a forward
contract (when no distinction is intended, an “anticipatory
contract”) assumes the risk that the market price for delivery of
the commodity on the agreed date will change. Changes in the
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