George A. Hudspeth and Wife, Vona Lee Hudspeth v. United States

Taxpayers deducted a decrease in their cotton allotment as a business loss in 1971. The deduction was disallowed, and taxpayers sued in district court for a refund. Summary judgment was granted in favor of the United States on the basis that there was no closed transaction giving rise to a deductible business loss. We affirm.

In the years 1968 through 1970, the taxpayers bought cotton acreage allotments (under the Agricultural Adjustment Act of 1938, 7 U.S.C. § 1281 et seq.) totaling 145.3 acres. In 1971 the national cotton allotment was reduced. The allocation of this reduction resulted in a…