Don D. Dial Elizabeth A. Dial v. Commissioner Internal Revenue Service

Don Dial appeals a summary judgment of the Tax Court finding deficiencies in his federal income taxes for 1977, 1978, and 1979. We affirm.

BACKGROUND

During the years in question, Dial traded in Treasury bill futures contracts for his own account. As the Tax Court explained, Treasury bills are short-term debt obligations of the United States that are sold at a price discounted below face value. The return to a holder of a Treasury bill is the difference between the discounted price and the face value at maturity. As the interest rate varies, prices at which Treasury bills are sold also vary.

Dial did not deal directly in Treasury bills. He dealt in futures contracts that treated Treasury bills as the underlying commodity.

Moody v. Commissioner, 49 T.C.M. (CCH) 514, 515 (1985). Thus, when Dial purchased a Treasury bill futures contract, he obtained the right to receive delivery of a certain quantity and type of Treasury bills on a specific date. When Dial sold a Treasury bill futures contract, he obligated himself to deliver a certain quantity and type of Treasury bills on a specific date. The parties agree that Dial dealt only in futures; he always satisfied his contracts by…