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not intend to limit the application of the substitute for
ordinary income doctrine by the Arkansas Best holding.
This Court and three Courts of Appeals have consistently
held that the substitute for ordinary income doctrine was not
obviated by the holding in Arkansas Best. No court has attempted
to express a bright-line rule defining which property rights
might represent substitutes for ordinary income. Each has
expressed the difficulties that exist in attempting to draw a
bright line. Only one thing becomes clear in these analyses--the
process of defining which property or property rights fit within
the substitute for ordinary income doctrine is ad hoc and fact
specific. Given that the doctrine has not been obviated or
limited, we see no reason to depart from the established and
uniform precedent. We, accordingly, proceed to decide whether
the factual circumstances of the case we consider fall within the
doctrine’s embrace.
Initially, we reject petitioners’ attempt to limit the
application of the doctrine to four general factual categories.
Neither the holding nor the rationale of the Supreme Court in
Arkansas Best changed the underlying principle of the substitute
for ordinary income doctrine. Although the Arkansas Best holding
was intended generally to define “capital asset” in accordance
with the statute, as reflected in note 5 of the Arkansas Best
opinion, there was no intent to change or modify the holdings of
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