- 40 -
which maintained account No. 603, and Omni Securities, Inc., which
maintained account No. 701. Horizon functioned as a market maker
with respect to other traders. It traded for only 2 months at the
end of 1981 and the beginning of 1982. During December 1981, it
had cancellation-fee income of $26,347,590; the following month, in
January 1982, it incurred cancellation-fee losses of $26,256,320.
At the end of the taxable year, Horizon reported the $91,270
difference as income on Leema's consolidated return.15
OPINION
These cases are part of a series of cases that examines the
investment programs of Merit. We have addressed various aspects of
these programs in other, previously issued opinions. See Lee v.
Commissioner, T.C. Memo. 1997-172, affd. in part and remanded in
part 155 F.3d 584 (2d Cir. 1998); London v. Commissioner, T.C.
Memo. 1996-192; Alessandra v. Commissioner, T.C. Memo. 1995-238,
affd. without published opinion 111 F.3d 137 (9th Cir. 1997);
Lamborn v. Commissioner, T.C. Memo. 1994-515; Seykota v.
Commissioner, T.C. Memo. 1991-234, modified T.C. Memo. 1991-541.
None of these previous cases is dispositive of the current cases,
which involve different petitioners and the holding of a new trial
at which the parties presented different testimony and documentary
evidence. We have accordingly addressed the issues in the present
15 Leema's other subsidiary, Omni Securities, Inc., also
functioned as a market maker, but it performed no trading in the
stock forwards market until Leema's next taxable year.
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