Opinion ID: 528842
Heading Depth: 2
Heading Rank: 1

Heading: London option transactions.

Text: 8 The Glass cases dealt with a tax savings scheme relied on by a group of some 1400 taxpayers between 1976 and 1980. This scheme took advantage of the IRS private letter rulings in the early 1970s which stated that the closing of bought options resulted in a capital gain or loss while the closing of sold options resulted in an ordinary gain or loss. As a result, many persons carried out London option transactions involving a two-year series of trades in options and forward contracts which resulted in allegedly ordinary losses in the first year and approximately off-setting capital gains in the second year. The transactions also shared the characteristic that they were zeroed out, or closed out, with little or no net gain or loss. These transactions were brokered mostly by six firms, including Rudolf Wolff and Company, Ltd. and Competex, S.A. (the firms used by appellant-taxpayers). 9