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In applying the P.G. Lake, Inc. limitation on what property
qualifies as a capital asset, courts generally consider the
entire economics of a transaction, as suggested by Dresser
Indus., Inc. in the above quotation, and evaluate all of the
rights of the taxpayer, as well as all of the risks and
obligations of the taxpayer associated with ownership of the
property before the transfer. For example, in an attempt to
explain P.G. Lake, Inc., we stated in Guggenheim v. Commissioner,
46 T.C. 559 (1966)--
The Court in Lake was faced with the problem
whether a transfer of part of a capital asset is itself
the transfer of a capital asset. That part was defined
and delineated by the taxpayer in such a manner as to
consist essentially of only the rights to income. The
transferee assumed few of the risks identified with the
holding of a capital asset; he assumed only a nominal
risk of his oil payment right decreasing in value and
none of the possibility of the oil payment right
increasing in value. On the other hand, the taxpayer,
after the transfer, retained essentially all of the
investment risks involved in his greater interest to
the same extent as before the transfer. [Id. at 569.]
The above statement implies that whether investment risks are
associated with contract rights transferred is a particularly
relevant consideration in determining whether the rights are to
be treated as capital assets.
In Commissioner v. Ferrer, 304 F.2d 125, 130 (2d Cir. 1962),
revg. in part and remanding 35 T.C. 617 (1961), the Court of
Appeals for the Second Circuit concluded, among other things,
that where a taxpayer's “bundle of rights” reflected “something
more than an opportunity, afforded by contract, to obtain
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