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stress. Ms. Rivera left the country during part of that period to
recover from her illness.
(1) 1980 Merit Transactions
(a) T-Bill Options
For her 1980 taxable year, Ms. Rivera claimed ordinary losses
of $81,001 from T-bill option trades and capital losses of $408,527
from T-bond option trades. The 1980 T-bill trade followed the
yearend open-switch-close trading pattern. Her account, No. 203,
was opened with the purchase of 24 put and 24 call options on
December 17, 1980. On December 29, 1980, 12 days later, the switch
occurred by closing 22 of the contracts--each generating a loss--
and replacing them with new ones. The switch terminations
generated ordinary losses of $81,001. The account maintained an
unrealized gain of $80,985 a few days into 1981, her next taxable
year.
(b) T-Bond Options
Ms. Rivera's 1980 capital losses arose from trading in her T-
bond account, No. 189. These also followed the open-switch-close
pattern. The account shows the purchase of 20 T-bond contracts in
a combination spread on December 5, 1980. The switch came on
December 30, 1980, when the account closed out 17 contracts,
generating a capital loss of $408,527. She maintained an
unrealized capital gain on her bond transactions of $423,538 into
1981.
Ms. Rivera's reported ordinary losses from T-bill options and
stock forwards in 1980, compared to her taxable income in the same
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