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comparable adjustments in Rivera v. Commissioner, Tax
Court Docket Nos. 41343-85 and 22921-86 ("CONTROLLING
CASES").
The above-mentioned "controlling cases" are two of seven
consolidated cases reported as Leema Enterprises, Inc. v.
Commissioner, T.C. Memo. 1999-18. Therein we addressed issues
concerning the Merit T-bill and stock forward trades and held
that--
the Merit markets lacked economic substance. Although
the form appeared as markets for particular financial
instruments, the substance was the creation of
straddles to generate loss deductions without
corresponding economic losses. * * * In short, the
Merit trades * * * cannot support the losses claimed.
We alternatively held that, even if the transactions had
substance, the individual Merit investors' "primary objective was
obtaining tax benefits", and thus they "failed to meet the
statutory requirements for deducting the losses at issue".
Our holding in Leema Enterprises, Inc., accordingly disposes
of the Merit T-bill and stock forward losses at issue here. For
the reasons stated therein, those losses are not allowed in this
case.
The parties have also entered into a "Second Stipulation of
Facts" wherein they agreed "that all transactions involving the
Arbitrage and Carry ('A/C') program promoted by Futures Trading,
Inc. ('FTI') will be ignored for Federal income tax purposes".2
2 In four consolidated cases, Seykota v. Commissioner, T.C.
Memo. 1991-234, supplemented by T.C. Memo. 1991-541, we addressed
issues concerning the FTI A/C transactions. Therein we held that
the FTI A/C program was an economic sham and disallowed
(continued...)
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