ottmodule item.id-25023426 D Berkheimer Tax InnoMunicipal Statistics D KEYSTONE

Question

ottmodule item.id-25023426 D Berkheimer Tax InnoMunicipal Statistics D KEYSTONE COLLECTI Zpwhip Tet M Business and ST 1 -ya REAL ESTATE PALS UC UNEMPLOYMENT Minor Project 1 Submit Assignment Due Sunday by 11:59pm Points 100 Submitting a file upload Available Sep 10 at 12am-Sep 16 at 11:59pm 7 days esources After you complete the task below, submit the required documentation by uploading your file to this assignment. Cassius Clay operates a bituminous coal home heating and delivery service in Dauphin and Centre counties. He must have a supply of bituminous coal on hand so customers may get the coal they need to heat their homes. As a convenience to his customers, and to prevent high bills over the winter and low bills in the summer, he allows them to buy coal in advance at set prices and to pay for the coal ratably over a calendar year. To ensure himself a steady, reliable and affordable supply of coal and to protect against price fluctuations, Cassius Clay enters into certain futures contracts to buy coal at a future date and at a set price. Clay clearly indicates beforehand that the futures contract in which he enters to buy coal is simply to secure a supply of coal and to protect him from losses on the futures contracts with his customers to sell coal, and that he does not intend to proft from the contract itself PSU Assume that Cassius Clay realizes a loss on the futures contract in which he entered to buy coal. That is, the price per his contract to buy coal is higher than the actual spot market price of coal the day he acquires a new supply of coal. How should Cassius Clay classify the loss-as ordinary or as capital? Be sure to demonstrate your research skills in writing a memo to the file. You must cite the relevant code section(s) (including section 1221) and at least two (2) Supreme Court cases (hint: the two key cases are dated 1955 and 1988) You must also address the general principle of classifying assets-as capital or as operating-and the exceptions thereto As a reminder, the memo to the file should contain a brief statement of the facts, a statement of the issuels), your conclusion/s) and recommendations, and an analysis which will include the sources (eg, Code, Regs, court cases) you used in reaching your conclusion(s). Be sure the sources are cited appropriately Next. Previous

Explanation / Answer

Federal Taxation
To:
From:
[Date]
Subject: Federal Taxation
Cassius Clay understands a misfortune on the future contract in which he entered to purchase coal. That is, the cost per his agreement to buy coal is higher than the real spot market cost of coal the day he gains another supply of coal. If the citizen claim of liabilities, the obligation alleviation constitutes thought in return for the association intrigue, and the misfortune is a capital disaster. The Court, with regards to the IRC of 1954 and point of reference in different courts, chose to surrender of an association intrigue was not a deal or trade and could be agreed standard as opposed to capital misfortune treatment.
"Williams versus the United States" case has been referred to as a point of reference more than once by Federal Courts over the United States and has been composed about in more than 100 law audit articles regarding the matter of tax prosecution (pktaxlaw, 1995). As characterized by the “Internal Revenue Code,” prospects are viewed as “Section 1221 Contracts.” For assess announcing purposes, opportunities fall under the stamp to showcase class, in that they are set apart to-advertise costs as of year-end. In Corn Products Refining Co. v. Commissioner case, the finding by Tax Court as well as Court of Appeals that applicant's buys constitute "an indispensable piece of its assembling business" here supports. The Tax Court as well as Court of Appeals observed candidate's prospects exchanges to be a vital part of its business intended to ensure its assembling operations against a cost increment in its key crude material and to guarantee a prepared supply for future assembling prerequisites (Corn Products Refining Co. v. Commissioner, 1955). The future contracts are institutionalized; trade exchanged contracts to buy at a settled cost a predetermined amount and grade of a product for conveyance at a predefined time and place later on. One gathering consents to offer an item on a future contract and the other party agrees to acknowledge transfer of and pay for the product to the predetermined future date. When going into a prospects contract on a U.S. trade, neither one of the parties pays any thought to the next gathering. Rather, to guarantee payment, U.S. fates contracts are liable to a margining framework that fills in as a decent confidence store, not as payment of the price tag.

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