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transactions” and raised the specter of “artful devices”. I
believe that it is fair to say that the majority has looked to
tax the cancellation transactions on the basis of what it
considers to be their substance. In searching for that
substance, however, the majority has dug no deeper than the
fiction that accounts for the tax treatment of exchange regulated
offsets and forward contracts settled by offset and payment.
Indeed, with respect to offsetting forward contracts, the
majority appears to conclude, wrongly, that all such contracts
cease to exist on the offset date. The reality of the settlement
of anticipatory contracts by offset is not that the contract
holder took delivery under a long contract of a commodity that he
then used to satisfy his delivery obligation under a short
contract. That is a fiction imposed on the taxpayer because of
the way he chose to cast his transaction. To impose that fiction
on a taxpayer who, for whatever reason, chose not to cast his
transaction that way seems to me to be wrong, at least without
some better explanation than what the majority gives. From a
policy perspective, I can sympathize with the majority’s concern
that a taxpayer should not be able to lower his tax bill simply
on the basis of which form, as between two economically
equivalent (or similar) forms, he chooses. The majority’s
concern is apparent in how, in part, it frames the issue in this
case: “whether the taxpayers can convert the capital loss into
an ordinary loss”. Majority op. p. 14 (emphasis added). That
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