Stewart Silk Corp. v. Commissioner
United States Tax Court
Petitioner, a manufacturer of silk cloth, in 1939 had a large inventory of raw silk on hand. It was meeting with increasing sales resistance to its product because of competition with synthetic fabrics. For the purpose of protecting a part of its inventory against unfavorable market fluctuations and at the insistence of its financier, petitioner sold silk futures on the Commodity Exchange covering approximately one-third of its holdings.
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Petitioner, a manufacturer of silk cloth, in 1939 had a large inventory of raw silk on hand. It was meeting with increasing sales resistance to its product because of competition with synthetic fabrics. For the purpose of protecting a part of its inventory against unfavorable market fluctuations and at the insistence of its financier, petitioner sold silk futures on the Commodity Exchange covering approximately one-third of its holdings. After the outbreak of war in Europe in September 1939, raw silk prices rose tremendously and petitioner was forced to close out its futures contracts, in the…
1Opinion of the Court
OPINION.
Arundell, Judge:
Although the tax year involved is 1941, the facts giving rise to the deficiencies occurred in 1939, and the issue concerns the amount of petitioner’s net operating loss in 1939, for purposes of carry-over to the tax year. The parties have stipulated that, if respondent correctly determined that petitioner’s loss on the futures transactions in 1939 was a capital loss, subject to the $2,000 limitation of section 117 (d) of the Internal Revenue Code, the deficiencies determined are proper, but that if, as petitioner contends, those transactions were hedges, the loss of…
2Cases cited1 opinion
- Estate of Makransky v. CommissionerUnited States Tax Court · 1945
3Cited by8 opinions
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- Hogg v. AllenDistrict Court, M.D. Georgia · 1952
- Federal Nat'l Mortgage Ass'n v. CommissionerUnited States Tax Court · 1993
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