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case, the Supreme Court held that although corn futures contracts
did not fall expressly within the statutory exclusions, profits
received from the purchase and sale of futures contracts entered
into in order to assure a reasonably priced supply of corn
inventory for the taxpayer's business did not qualify for capital
gain treatment. The Court observed that “Congress intended that
profits and losses arising from the everyday operation of a
business be considered as ordinary income or loss rather than
capital gain or loss.” Id. at 52.
In 1988, in Arkansas Best Corp. v. Commissioner, 485 U.S.
212, 219 (1988), the Supreme Court clarified that the Corn Prods.
judicial exception is more properly interpreted as involving an
application of the statutory exception for inventory under
section 1221(1). See also FNMA v. Commissioner, 100 T.C. 541,
573 (1993). As explained, respondent does not contend that
petitioners' contract rights fall within the inventory exception
to capital asset treatment.
Another limitation on the types of property which qualify
for treatment as capital assets was explained by the Supreme
Court in Commissioner v. P.G. Lake, Inc., 356 U.S. 269 (1958).
Thereunder, a mere right to receive ordinary income generally
will not qualify as a capital asset. The issue in Commissioner
v. P.G. Lake, Inc., supra, was whether a transfer of royalty
rights associated with the production of oil constituted sale of
a capital asset. After the transfer, the taxpayer retained a
reversionary interest in the underlying oil and gas leases, and
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