- 4 - During the taxable year ended February 28, 1995, petitioner, through the Frontier commodity account, was involved in numerous futures transactions for corn, soybeans, cattle, and hogs. The net result of these transactions was a loss of $40,934.80. Petitioner deducted $40,798 for "hedging expense" as an ordinary loss on its return for the year ending February 28, 1995. The reason why approximately $137 of losses was not deducted by petitioner is unknown to the parties. Of the total amount of the losses, $6,441.52 of the losses was generated by transactions in hog futures. In the notice of deficiency, respondent disallowed $6,305 of petitioner's hedging expense deduction (i.e., $6,441.52 of hog future losses less the approximately $137 of losses petitioner did not deduct), on the ground that petitioner was not engaged in the production of hogs. Respondent determined that the $6,305 loss was a capital loss. Respondent contends that because petitioner was not engaged in the hog business it could not have hedging transactions in that commodity and its losses incurred from transactions in hog futures are capital losses in nature, not ordinary losses. Petitioner contends that its method of involvement with hog operations is sufficient to allow the losses from the transactions to be deducted as hedging losses.Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
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