Court Opinion

ID: 4593625
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:11:12.613834+00
Date Added: 2024-06-11T07:51:06.095990
License: Public Domain

Joseph Maloney and Helen Maloney, Petitioners, v. Commissioner of Internal Revenue, RespondentMaloney v. CommissionerDocket No. 52922United States Tax Court25 T.C. 1219; 1956 U.S. Tax Ct. LEXIS 246; March 13, 1956, Filed 1956 U.S. Tax Ct. LEXIS 246">*246 Decision will be entered under Rule 50.  1. On August 11, 1949, petitioner, Joseph Maloney, entered into two futures contracts on the Chicago Board of Trade commodity futures market, one for the purchase of 50,000 bushels of May soybeans in job-lot quantities and the other for the sale of 50,000 bushels of May soybeans in round-lot quantities. He closed out his short position in round lots by offsetting purchases of round lots during the months November 1949 through February 1950, but maintained his long position in job lots for over 6 months, closing it out by an offsetting sale of May soybeans in job-lot quantities on April 25, 1950.  Petitioner reported the realization of long-term capital gain as the result of his contracts for the purchase and sale of May soybeans in job-lot quantities. Respondent determined that petitioner's simultaneous long and short positions in May soybeans should offset each other and that petitioner did not realize long-term capital gain on his job-lot transactions.  Held, transactions in job lots and round lots on the Chicago Board of Trade were separate and distinct and had economic significance.  Petitioner's contracts for the purchase of 50,0001956 U.S. Tax Ct. LEXIS 246">*247  bushels of May soybeans in job-lot quantities were held for over 6 months and the gain realized upon their disposition is to be treated as long-term capital gain.2. Respondent determined an addition under section 294 (d) (1) (A) because of petitioners' failure to make and file a declaration of estimated tax for the taxable year 1950.  Petitioner, Joseph Maloney, received at least $ 150 in income from dividends prior to August 1, 1950, and he realized a profit of over $ 30,000 from soybean trading during the first 5 months of that year.  Held, petitioners' failure to make and file a declaration of estimated tax was not due to reasonable cause.  Charles W. Davis, Esq., for the petitioners.Robert R. Veach, Esq., for the respondent.  Rice, Judge.  Murdock, J., dissenting.  Harron, Opper, and Pierce, JJ., agree with this dissent.  RICE25 T.C. 1219">*1220  This proceeding involves a deficiency in income tax determined against petitioners for the taxable year 1950 in the amount of $ 5,544.04 and an addition of $ 594.48 under section 294 (d) (1) (A) of the 1939 Code.The issues to be decided are: (1) Whether petitioners are entitled to long-term1956 U.S. Tax Ct. LEXIS 246">*249  capital gain treatment on the purchase and sale of contracts for 50 so-called job lots of 1,000 bushels each of May soybeans on the Chicago Board of Trade commodity futures market, said contracts for 50,000 bushels having been held for more than 6 months before their sale, if, on the same day that such 50,000 bushels were purchased in job lots, petitioner also sold 50,000 bushels of May soybeans on said market in so-called round lots of 5,000 bushels each; and (2) whether petitioners are subject to the additions to the tax provided by section 294 (d) (1) (A) for failure to make and file a declaration of estimated tax for the year 1950.Some of the facts were stipulated.FINDINGS OF FACT.The stipulated facts are so found and are incorporated herein by this reference.Joseph Maloney (hereinafter referred to as petitioner) and Helen Maloney were husband and wife, residing in Chicago, Illinois, during the taxable year 1950.  They filed a joint individual income tax return for that year with the collector of internal revenue for the first district of Illinois.Petitioner is a grain futures broker and a member of the Board of Trade of the City of Chicago.  Throughout the period January1956 U.S. Tax Ct. LEXIS 246">*250  1, 1949, until the time of the hearing herein, he was employed as the office manager of a grain brokerage firm.  Petitioner was permitted to enter onto the floor of the exchange and to execute contracts, sometimes referred to as trades, in his own behalf.  He was not, however, a member of the Board of Trade Clearing Corporation, the organization which acts as a clearinghouse for trading conducted on the Chicago 25 T.C. 1219">*1221  Board of Trade.  Petitioner cleared his trades through his employer, who was a clearing member.In August 1949, petitioner began trading in May soybeans on the Chicago Board of Trade commodity futures market. On the first day of such trading, August 11, 1949, he established a "long" position in May soybeans by contracting to purchase 50,000 bushels of May soybeans at $ 2.32 1/4 per bushel. On the same day, he entered into another trade whereby he contracted to sell 50,000 bushels of May soybeans at $ 2.32 1/4 per bushel, thus simultaneously establishing a "short" position in the same commodity. The purchase contract was made in quantity units of 1,000 bushels, known on the Chicago Board of Trade as job lots, and the sales contract was made in quantity units of1956 U.S. Tax Ct. LEXIS 246">*251  5,000 bushels, known on the Chicago Board of Trade as round lots.  These two 50,000-bushel contracts constituted petitioner's only soybean trading on August 11, 1949.Grain futures delivery contracts in job lots afford a method of hedging for the small country elevators and the smaller consumers of grain who normally ship or buy in quantities of less than 5,000 bushels at a time.  Further, a person with limited funds to invest can enter the grain futures market to trade in job lots with approximately one-fifth of the amount of capital required to enter the round-lot market.  Higher brokerage charges and commissions are imposed under the rules of the Chicago Board of Trade with respect to transactions in job lots than for transactions in round lots.  A price differential generally exists between job lots and round lots with a purchaser of job lots paying one-fourth cent per bushel over the quotation for round lots and a seller of job lots receiving one-fourth cent per bushel less than the quotation for round lots.  Trading in job lots amounts to about 1 to 2 per cent of the total volume of commodity futures trading on the Chicago Board of Trade.  Trading in round lots accounts for 1956 U.S. Tax Ct. LEXIS 246">*252  the remainder.The above two contracts, as well as all of petitioner's soybean trading, were effected and processed according to the rules of the Chicago Board of Trade and the Board of Trade Clearing Corporation.  Petitioner made the contracts in the soybean pit in which brokers dealing in soybeans congregate.  Trading in job lots and round lots takes place in separate sections of the pit and, in accordance with the rules of the Chicago Board of Trade and the Board of Trade Clearing Corporation, separate accountings are maintained by the brokers and the Clearing Corporation for trades in job lots and round lots.  At the close of a day's trading, each clearing member submits all of its day's trades in the form of a clearance sheet to the Clearing Corporation.  The clearing member also tenders, on behalf of its customers, check slips showing with whom each trade was made, the number of bushels, 25 T.C. 1219">*1222  and other relevant information to the Clearing Corporation, which delivers such slips to the clearing members for the other parties to the transactions.  These check slips are the contracts between the parties.  The Clearing Corporation then balances out the day's activity in the exchange1956 U.S. Tax Ct. LEXIS 246">*253  by collecting from those clearing members whose clearance sheets reflected a net buying position and paying those members whose sheets reflected a net selling position.When a futures delivery contract is cleared through the clearinghouse, the clearinghouse is deemed substituted as seller to the buyer, and is also deemed substituted as buyer to the seller, and thereupon the clearinghouse has all of the rights and is subject to all of the liabilities of the original parties with respect to such contract.  If a member buys and sells the same commodity for delivery in the same contract month, upon clearance through the clearinghouse, the purchases and sales are required to be offset to the extent of their equality and the member is deemed a buyer from the clearinghouse to the extent that his purchases exceed his sales, or a seller to the extent that his sales exceed his purchases.  Under the bylaws of the Board of Trade Clearing Corporation, however, job-lot contracts cannot be cleared against round-lot contracts, except that on the last day of the delivery month job-lot contracts may be cleared against round-lot contracts by attaching the odd-lot notices together and endorsing the last1956 U.S. Tax Ct. LEXIS 246">*254  one.Rules and regulations of the Secretary of Agriculture, promulgated under the Commodity Exchange Act, 1 require futures commission merchants to offset against each other simultaneous positions which are established by a trader in the same commodity on the same market, but specifically except simultaneous long and short positions in the same commodity where one such position is maintained in job lots and the other in round lots on markets where job lots and round lots are cleared separately.A trader's position is closed either by subsequent purchases or sales, or by delivery of the commodity itself.  A trader who has a short position in job lots cannot satisfy his obligation by entering into a contract for the purchase of an equal number of bushels in round lots or vice versa.  In the event it is impossible for one who has a long position, whether in job lots or round lots, to close out that long posision by an offsetting sale in job lots or round lots, respectively, he is required1956 U.S. Tax Ct. LEXIS 246">*255  to take delivery in the contract month.  Deliveries are made to the oldest long position on the clearinghouse books and, in determining the priority for delivery, a separate order of priority is maintained for job lots from that for round lots.25 T.C. 1219">*1223  In this clearinghouse process, petitioner's two August 11, 1949, contracts were not offset against each other since the exchange separately processes job lots and round lots.During the months November 1949 through February 1950, petitioner entered into the following contracts to purchase a total of 50,000 bushels of May soybeans in round-lot quantities:Number of 5,000Price perDatebushel contractsbushelNovember 8, 19491$ 2.24 3/4January 10, 195012.29 1/2February 1, 195012.29 3/8February 1, 195012.28 3/4February 2, 195032.27 1/4February 2, 195012.26 1/2February 2, 195022.26 1/4In accordance with the rules and practice of the Chicago Board of Trade, petitioner's clearing member applied the round-lot purchases made during the months November 1949 through February 1950 against the round-lot contract to sell 50,000 bushels of May soybeans which petitioner had entered into on August1956 U.S. Tax Ct. LEXIS 246">*256  11, 1949, thus closing out petitioner's short position in such round lots.  On April 25, 1950, petitioner contracted to sell 50,000 bushels of May soybeans, in job-lot quantities, 25 of such contracts being at $ 2.99 per bushel and the remaining 25 contracts at $ 2.99 1/4 per bushel. Petitioner's clearing member then closed out the long position which petitioner had established in job lots on August 11, 1949, and reported to petitioner that the job-lot sales on April 25, 1950, resulted in "Long Term" gains.Petitioner incurred and paid a selling commission of $ 62.50 in connection with the April 25, 1950, contracts for the sale of 50 thousand bushels of May soybeans in job-lot quantities.Except for the purchase on August 11, 1949, and the sales on April 25, 1950, petitioner did not engage in any other trading in May soybeans in job-lot quantities on the Chicago Board of Trade during 1949 and 1950.  Petitioner traded in hundreds of thousands of bushels of May soybeans, in round-lot quantities, on the Chicago Board of Trade comodity futures market during the period August 11, 1949, through May 20, 1950.  Such trading consisted of hundreds of trades in quantities of five, ten, or fifteen1956 U.S. Tax Ct. LEXIS 246">*257  thousand bushels -- occasionally involving as much as fifty thousand bushels in one transaction.  He did not take delivery or make delivery of any soybeans relating to such trading, but offset each contract against a contra contract prior to delivery date by means of the clearinghouse function performed by the Chicago Board of Trade Clearing Corporation.In his computation of the deficiency herein, respondent treated the two August 11, 1949, transactions, the purchase in job-lot quantities and the sale in round-lot quantities, as having offset each other.  He 25 T.C. 1219">*1224  regarded petitioner as holding no long position in job lots on January 1, 1950, and recomputed the gain and loss realized by petitioner on each of the hundreds of transactions entered into by him in May soybeans during the year 1950.  On the joint individual income tax return which they filed for 1950, petitioners reported that the purchase, in job lots, on August 11, 1949, and the sale, in job lots, on April 25, 1950, resulted in long-term capital gain of $ 33,375, and that the remainder of the transactions in May soybeans during 1950 resulted in a net short-term capital loss of $ 3,193.75.  Respondent determined 1956 U.S. Tax Ct. LEXIS 246">*258  that the net result of petitioner's transactions in May soybeans during 1950 was a net short-term capital gain of $ 30,568.75.Petitioners did not individually or jointly file a declaration of estimated tax for the year 1950.  During that year, petitioner received a salary of $ 5,900 for his work as office manager of a grain brokerage firm and $ 1,284 of this amount was withheld in tax by his employer.  Petitioner, Helen Maloney, was a schoolteacher and a housewife during the year 1950.  She received a salary of $ 3,980.75 from her employment during that year, from which there was withheld income tax of $ 551.60.  She received no other income during the year, and reported her salary on the joint return which she and her husband filed for that year.  In addition to their salaries, petitioners reported dividends of $ 275, interest of $ 189.38, a long-term capital gain of $ 3,485.29 from the sale of Board of Trade bonds, and a long-term capital gain of $ 33,375 on the sale of 50 thousand bushels of May soybeans. They also reported long-term capital losses of $ 666.67, and short-term capital losses of $ 11,109.87.At least $ 150 of the $ 275 dividend income received during 1950 was received1956 U.S. Tax Ct. LEXIS 246">*259  before the end of July.  Except for the aforementioned dividends and interest, which he had received in similar amounts in the previous year, and except for his salary, petitioner's only other source of recurrent income was from his trading in commodities on the Chicago Board of Trade.  This trading was highly speculative and, in the taxable year 1952, petitioner incurred a loss from trading in excess of $ 9,000.  During the first 5 months of the taxable year 1950, petitioner realized a profit of over $ 30,000 from soybean trading. However, he occasionally suffered losses of as much as $ 700 to $ 800 a day from trading and his over-all profit from trading during 1950 was somewhat over $ 20,000.During the year 1950, claims amounting to approximately $ 20,000 were pending against petitioner.  Such claims arose from a partnership venture in which petitioner had participated with two other individuals.Petitioners claimed four exemptions on their joint return for 1950, one each for themselves and their two children.25 T.C. 1219">*1225  Petitioners' failure to file a declaration of estimated tax for the year 1950 was not due to reasonable cause.OPINION.The principal issue to be decided herein1956 U.S. Tax Ct. LEXIS 246">*260  is whether a trader who maintained simultaneous long and short positions in futures of the same commodity, prior to the effective date of section 117 (l) of the 1939 Code, 21956 U.S. Tax Ct. LEXIS 246">*262  is entitled to have each of such simultaneous positions recognized for tax purposes where one of such positions was maintained in job-lot quantities of the commodity and the other in round-lot quantities. Petitioner established simultaneous positions in soybean futures on August 11, 1949, by entering into two contracts on the Chicago Board of Trade commodity market, one for the purchase of 50,000 bushels of May soybeans, in job-lot quantities, and the other for the sale of an equal amount of May soybeans in round-lot quantities. During subsequent months, he bought and sold hundreds of thousands of bushels of May soybeans futures in round-lot quantities; but not until April 25, 1950, did he enter into a contract to sell May soybeans in job-lot quantities. On that date, he entered into contracts for the sale of 50,000 bushels of May soybeans in job lots.  In accordance with the rules of the Chicago Board of Trade, 3 the brokerage house through which petitioner cleared his various trades maintained separate 1956 U.S. Tax Ct. LEXIS 246">*261  accountings for the transactions in job lots and those in round lots, thus closing out petitioner's short position in May soybeans in round lots during the months of November 25 T.C. 1219">*1226  1949 through February 1950, but holding open petitioner's long position in job lots until the offsetting sale in job lots was made some 8 months later.  On his return for 1950, petitioner treated his purchases and sales of May soybeans in round-lot quantities as short-term capital transactions, but treated the two job-lot transactions entered into during 1949 and 1950, namely, the purchase on August 11, 1949, and the sale on April 25, 1950, as the purchase and sale of a capital asset held for more than 6 months and thus entitled to long-term capital gains treatment.Respondent contends that petitioner did not sell or exchange any property on April 25, 1950, which he had held 6 months or longer.  He argues that petitioner's August 11, 1949, purchase in job-lot quantities was effectively offset on the same day when petitioner sold an equal amount of May soybeans in round lots and that to fail to regard these two transactions in that light, for income tax purposes, is to place form over substance.  Respondent relies on the Bureau of Internal Revenue Ruling, Mim. 6243, 4 issued on March 8, 1948, to support his determination.  That ruling states in pertinent part as follows:1. Wide publicity has been given to1956 U.S. Tax Ct. LEXIS 246">*263  the statement of the Secretary of Agriculture, released to the press on December 4, 1947, to the effect that certain futures transactions in commodities "appear fictitious in nature and should be eliminated." Specifically, the Secretary referred to offsetting purchases and sales in the same futures contract as a device used by speculators to postpone, reduce, or avoid Federal income taxes.2. * * * The factual basis for the Secretary's statement was the existence of a large number of traders' accounts having equal offsetting purchases and sales of the same commodity in the same market, which transactions were being held open rather than balanced off against each other and closed out.  These so-called "open positions" were thus, as a matter of fact, closed, except that the offset, as a bookkeeping matter, had not been made. * * *3. It is well established that fictitious or sham transactions may be disregarded in the determination of true tax liabilities and that if, upon an analysis of a transaction, it appears that substance rather than form should govern, the form of the transaction may be disregarded.  (See Gregory v. Helvering, 293 U.S., 465,1956 U.S. Tax Ct. LEXIS 246">*264  Ct. D. 911, C. B. XIV-1, 193 (1935); Helvering v. Clifford, 309 U.S., 331, Ct. D. 1444, C. B. 1940-1, 105; Commissioner v. Tower, 327 U.S., 280, Ct. D. 1670, C. B. 1946-1, 11; Bazley v. Commissioner, 155 Fed. (2d), 237, affirmed, 331 U.S. 737">331 U.S. 737, Ct. D. 1687, C. B. 1947-2, 79.).4. In its audit of returns of taxpayers trading in commodity contracts, the Bureau will consider that offsetting trades in the same commodity in the same market for delivery in the same contract period are closed as of the moment the offsetting trade was made, and that the gain is realized or the loss is sustained at that time since such holding accurately reflects the realities of commodity trading. * * *However, after careful examination of the above ruling and all the evidence submitted with respect to trading on the Chicago Board of Trade commodity futures market, 1956 U.S. Tax Ct. LEXIS 246">*265  we are convinced that the respondent's 25 T.C. 1219">*1227  determination is erroneous.  We think it clear that, in a commodity market where round lots and job lots are cleared separately, a long position in job lots need not be offset, for tax purposes, against a simultaneous short position in round lots.  The first paragraph of Mim. 6243 indicates that it was being issued to implement a statement of the Secretary of Agriculture to the effect that certain futures transactions in commodities "appear fictitious in nature and should be eliminated." However, reference to the regulation which was issued by the Secretary of Agriculture "in aid of the prohibition against wash sales and fictitious sales contained in the Commodity Exchange Act," 5 discloses that the Secretary did not consider the establishment of simultaneous positions in job lots and round lots to be fictitious in nature, and specifically provided that such transactions should not come within the scope of his regulation, if such purchases and sales were made on commodity markets where round lots and job lots are cleared separately. Not only were round lots and job lots separately cleared on the Chicago Board of Trade commodity futures1956 U.S. Tax Ct. LEXIS 246">*266  market, but the entire pattern of trading on this market convinces us that there was true economic significance in the use of two different quantity units for trading in soybeans and that transactions in one quantity unit must be regarded as entirely separate and distinct from transactions in the other.The overwhelming majority of the transactions executed on the Chicago Board of Trade commodity futures market were made in quantity units of 5,000 bushels, known as round lots.  In order to permit smaller consumers of grain, who normally ship or buy in quantities of less than 5,000 bushels at a time, to enter the market for hedging purposes, trading was permitted in quantity units of 1,000 bushels, known as job lots.  Trading in job lots also enabled individuals with limited capital to enter the market and invest in commodity futures.  Trading in the two quantity units of the same commodity was carried on in such a manner that trading1956 U.S. Tax Ct. LEXIS 246">*267  in one quantity unit was as separate and distinct from trading in the other as it would have been had the trader been dealing in entirely different commodities. Thus, job lots and round lots were traded in separate sections of the grain pit, were separately recorded and accounted for, were separately cleared, involved a price differential usually amounting to one-fourth cent per bushel, involved a differential in brokerage and commission charges, and involved a different class of investors and different business purposes.  Clearly, such distinctions show that, in the instant case, there was true economic reality to the maintenance of simultaneous positions in the same commodity, where one of such positions was maintained in job lots and the other in 25 T.C. 1219">*1228  round lots.  Under these circumstances and in view of the express recognition given by the Secretary of Agriculture to the difference between job lots and round lots, we hold that trading in job lots must be regarded as separate and distinct from trading in round lots for tax purposes.The weakness and fallacy of respondent's position herein are illustrated by his admission that none of petitioner's transactions were fictitious1956 U.S. Tax Ct. LEXIS 246">*268  or sham.  He states that he "recognizes the existence and legality of each of petitioner's contracts" but "* * * inasmuch as none of petitioner's contracts were fully executed, but were offset prior to delivery, that in determining which contracts should be offset against each other for purposes of income tax, consideration should be given to substance and not to the form employed by petitioner." There is an inherent contradiction in respondent's position since, if we give consideration to the "substance and not to the form employed by petitioner" and the contracts entered into by petitioner were not fictitious or sham, we are obviously not free to manipulate the results of petitioner's trading by offsetting one type of contract against another type which was recognized as entirely separate and distinct by the Secretary of Agriculture and all others engaged in buying and selling such contracts on the Chicago Board of Trade.  Petitioner was not trading in fungible grain but rather, in contract rights to the commodity. It is the contract itself with its specific terms, rather than a quantity of a fungible commodity, which constitutes "property held by the taxpayer" within the1956 U.S. Tax Ct. LEXIS 246">*269  definition of the term "capital assets" prescribed by section 117 (a) (1) of the 1939 Code.  Since the bundle of rights in job-lot contracts on the Chicago Board of Trade were clearly distinguishable from the rights created by contracts in round lots, these two types of contracts must be recognized as separate and distinct capital assets under section 117 (a) (1).Moreover, we think the result herein is buttressed by the line of cases which recognizes that, prior to the addition of section 117 (l) to the 1939 Code by section 211 of the Revenue Act of 1950, simultaneous long and short positions could be maintained and recognized for tax purposes in securities trading. Richardson v. Commissioner, 121 F.2d 1 (C. A. 2, 1941) certiorari denied 314 U.S. 684">314 U.S. 684 (1941); William V. Griffin, 45 B. T. A. 588 (1941); Robert W. Bingham, 27 B. T. A. 186 (1932). As we have indicated above, transactions in round lots and job lots of the same commodity are clearly identifiable as separate and distinct transactions and we can see no reason why such transactions should not be granted1956 U.S. Tax Ct. LEXIS 246">*270  treatment similar to that accorded securities prior to the enactment of section 117 (l).In reaching our conclusion set out above, we do not decide whether on and after September 23, 1950, the effective date of section 117 (l), 25 T.C. 1219">*1229  the above transactions would be entitled to short-term or long-term capital gain treatment since such question is not before us.The remaining issue to be decided is whether petitioners' failure to make and file a declaration of estimated tax for the year 1950 was due to reasonable cause, thereby excusing them from the addition to the tax determined by respondent under section 294 (d) of the 1939 Code.  Section 58 (a) of the 1939 Code requires an individual to make and file a declaration of estimated tax if either of the two following conditions applies:(1) his gross income from wages (as defined in section 1621) can reasonably be expected to exceed the sum of $ 4,500 plus $ 600 with respect to each exemption provided in section 25 (b); or(2) his gross income from sources other than wages (as defined in section 1621) can reasonably be expected to exceed $ 100 for the taxable year and his gross income to be $ 600 or more.It is further provided, 1956 U.S. Tax Ct. LEXIS 246">*271  in section 58 (d), 6 that if the requirements for filing are not met before March 1 of the taxable year, but are met at some time subsequently during that taxable year, then a declaration of estimated tax must be made and filed on or before either of the three alternate dates specified.Respondent has determined that, although the salaries1956 U.S. Tax Ct. LEXIS 246">*272  received by each of the petitioners during 1950 were insufficient to require their filing individual or joint declarations of estimated tax under section 58 (a) (1), petitioners could reasonably be expected to have realized that, in addition to their income from wages, their income from sources other than wages would exceed $ 100 during 1950, thus requiring the filing of an estimated tax return pursuant to section 58 (a) (2).  Petitioners contend that their income for 1950 from sources other than salaries was a highly uncertain one, thus justifying their failure to file an estimated tax return.  First, they point out that at the beginning of 1950 a $ 20,000 claim was outstanding against petitioner, arising from a prior partnership venture.  They argue that they might have been required to dispose of their total investments in stocks and bonds in order to settle this $ 20,000 claim, thus eliminating potential dividend and interest income.  However that may be, it appears from the record that this claim was settled for $ 1,500 during 1950, and that petitioners did not have to sell their securities.  Petitioner 25 T.C. 1219">*1230  received dividends of $ 275 and interest of $ 189.38 during 1950. 1956 U.S. Tax Ct. LEXIS 246">*273  At least $ 150 of the dividend income was received prior to the end of July of that year, thereby meeting the requirement of section 58 (d) that an estimated tax return be filed on or before September 15 if one had not previously been filed.However, petitioner's main source of income, other than salaries, was from his activities as a trader in commodity futures.  He could reasonably have expected, on or before March 15, 1950, that he would realize a gross income substantially in excess of $ 100 from this activity.  Actually, petitioner realized a profit of over $ 30,000 during the first 5 months of 1950 from trading in soybeans. Petitioner argues that, because of the speculative nature of commodity trading, there was no assurance that he would not suffer net losses from such transactions during the year 1950 and cites the fact that, in 1952, he actually did suffer substantial net losses from trading in commodity futures.  However, petitioner obviously intended to realize a substantial profit from his commodity trading activities.  His profit during the first 5 months of 1950 was so large that regardless of the speculative nature of this activity he should have filed an estimated1956 U.S. Tax Ct. LEXIS 246">*274  tax return.Petitioner, as a licensed broker and office manager, is a man of considerable professional and business experience.  His gross income in 1950 was so substantially in excess of the minimum requiring the filing of a declaration that we must hold that his failure to file was not due to reasonable cause.Decision will be entered under Rule 50.  MURDOCK Murdock, J., dissenting: There is not a sufficient economic and realistic distinction between round and job lots of these transactions in futures to reverse the Commissioner's determination.  Footnotes1. 7 U.S. C. A., Sec. 1-17↩ (a).2. Section 117 (l) is applicable with respect to taxable years beginning after September 23, 1950, and, therefore, does not govern the result in the instant case.  It states, in part, as follows:SEC. 117. CAPITAL GAINS AND LOSSES.(l) Short Sales, Etc.  -- In the case of a short sale of property made by the taxpayer after the date of the enactment of the Revenue Act of 1950: (1) Short-term gains and holding periods.  -- If substantially identical property has been held by the taxpayer on the date of such short sale for not more than 6 months (determined without regard to the effect, under subparagraph (B) of this paragraph, of such short sale on the holding period), or if substantially identical property is acquired by the taxpayer after such short sale and on or before the date of the closing thereof -- (A) any gain upon the closing of such short sale shall be considered as a gain upon the sale or exchange of a capital asset held for not more than 6 months (notwithstanding the period of time any property used to close such short sale has been held); and(B) the holding period of such substantially identical property shall be considered to begin (notwithstanding the provisions of subsection (h)) on the date of the closing of the short sale, or on the date of a sale, gift, or other disposition of such property, whichever date occurs first.  This subparagraph shall apply to such substantially identical property in the order of the dates of the acquisition of such property, but only to so much of such property as does not exceed the quantity sold short.↩3. Although regulations promulgated by the Secretary of Agriculture under the Commodity Exchange Act required that simultaneous long and short positions established by a trader in the same commodity on the same market be offset against each other, a specific exception was made for simultaneous positions in job lots and round lots of the same commodity, provided that job lots and round lots were cleared separately, as they were on the Chicago Board of Trade.↩4. 1948-1 C. B. 44↩, 45.5. 12 Fed. Reg. 8266 (Dec. 10, 1947); 17 C. F. R. Sec. 1.46↩.6. SEC. 58.  DECLARATION OF ESTIMATED TAX BY INDIVIDUALS.(d) Time and Place for Filing.  -- (1) In general.  -- The declaration required under subsection (a) shall be filed on or before March 15 of the taxable year, except that if the requirements of section 58 (a) are first met (A) after March 1 and before June 2 of the taxable year, the declaration shall be filed on or before June 15 of the taxable year, or(B) after June 1 and before September 2 of the taxable year, the declaration shall be filed on or before September 15 of the taxable year, or(C) after September 1 of the taxable year, the declaration shall be filed on or before January 15 of the succeeding taxable year.↩