Case: “Barrier Contracts” Not True Options, Petitioner Owned Underlying Securities, Required to Report Profits Annually (T.C. Memo) (IRC §1001)

“Barrier option contracts” entered into by Petitioner, a TEFRA partnership, were not true call options for federal tax purposes, and Petitioner, as the owner of the basket securities underlying the contracts, was required to realize and recognize trading profits annually under I.R.C. §1001, the U.S. Tax Court held in a memorandum opinion. The court concluded the contracts in substance were not call options because they lacked the essential economic and legal characteristics of genuine options. The court also held Petitioner did not make a valid mark-to-market election under §475(f) regarding the basket securities because the election purported to cover only ...