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Although the record does not provide as much detail concerning
the trades of Ms. Rivera, they nonetheless indicate yearend loss-
only transactions for 1980, when switches in her account generated
a loss of $81,001 in T-bills and a loss of $408,527 in T-bonds. In
1981, she had stock forwards losses of $699,300; the summaries of
her account offer no indication that any of her stock forwards
trades generated gains. In 1982, she took losses in July, October,
and December, eliminating her option gains incurred the previous
January. Her trades in 1983 were confined to the last half of the
year. Her records show a substantial profit going into the end of
the year, but she reduced her gain to $218,468 in December by taking
a loss of $536,985. She further reduced her gain by applying a
capital loss carryover of $123,570.
Leema engaged in switch transactions shortly before the end of
its taxable year; on June 19 and 27, 1980, its switch transaction
in the T-bond option account yielded no gains but only losses of
$846,735.67. Its first involvement with T-bills reflected modest
changes in response to customer trading, but, on the last day of its
taxable year, it engaged in 13 transactions, producing 12 losses and
1 gain. The net of this yearend trading was a loss of $3,321,822.
Although the record lacks detail about Leema's last year in issue,
its tax return indicates option income of $2,766,085 and
cancellation fee deductions of $2,845,358.
A further indication of a transaction lacking economic
substance is petitioners' consistent rolling of taxable income from
one year into the next. This practice completed the "tax
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