50
unsupported by any authority and is in apparent contradiction to
our findings and opinion in Hoover Co. v. Commissioner, 72 T.C.
206 (1979). Certainly, it is in contradiction to the
understanding of the facts in this case by the Court of Appeals
for the District of Columbia Circuit. In reversing us in part,
the court said:
The problem with the Tax Court’s reasoning is that
cancellation and offset are different in substance as well as
in form. When a contract is cancelled it simply ceases to
exist. When a contract is offset, both the original contract
and the offsetting contract remain in effect until the date
for delivery. * * * [Stoller v. Commissioner, 994 F.2d at
857-858; emphasis added.]
The majority may be misled by the way the partnership accounted
for offset transactions. It appears that the partnership
accounted for unrealized gains and losses in forward contracts as
of the offset date, the date of the inverse contract. That may
or may not have been correct, but it is not evidence that the
contracts were, by agreement, terminated on the offset date.
More to the point, it is not evidence of general industry
practice.
In addition, the majority suggests that, since “little, if
anything, `vanished' upon Holly's closing or settling the loss
legs”, sale or exchange treatment of those contract cancellations
is appropriate. Majority op. p. 25. The majority recognizes
that some contracts were not replaced (the November 25th group).
Nevertheless, the majority explains that what remained after the
contract cancellations was Holly's continued participation in
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