Samueli

Opinion by Judge TASHIMA; Concurrence by Judge RAWLINSON.

ORDER

Petitioners-appellants’ petition for panel rehearing, which is unopposed by respondent-appellee, at least in part, is granted. The Opinion, filed September 15, 2011, slip op. 17597, [ 658 F.3d 992 ], is amended, as follows:

1. In the second full paragraph on slip op. at 17619 [658 F.3d at 1003], line 3, the word shall be substituted for the word < purchase > in the phrase

2. The first paragraph on slip op. at 17628 [658 F.3d at 1008], commencing with “This error, however, did not make a difference ...” and ending with “we affirm the Tax Court’s ultimate deficiency determination.” is deleted, and replaced by the following:

3. The Conclusion, Part III, slip op. at 17628 [658 F.3d at 1008], is deleted, and replaced by the following:

Judge Rawlinson would grant the petition for panel rehearing, but only for the purpose of amending the majority opinion to conform to her concurring opinion.

No further petitions for rehearing shall be entertained.

OPINION

This case requires us to decide whether a purported securities loan with a fixed term of at least 250 days…

concurring in part, and concurring in the result:

I concur in the vast majority of the excellent opinion, and I concur in the judgment. I write separately only because I do not join that portion of the opinion holding that the Tax Court erred in concluding that the 2003 fee payment did not constitute interest.

The otherwise excellent opinion bases its conclusion regarding the 2003 fee payment on assumptions rather than on the record. See Opinion, pp. 415-16. However, we have reviewed these determinations by the Tax Court for clear error. See Gatto v. Comm’r, 1 F.3d 826, 828 (9th Cir.1993) (“We review for clear error the Tax Court’s determination that an interest deduction ... was not the result of genuine indebtedness....”) (citation omitted). The Samuelis’ claimed deduction resulted from a transaction that was similar to the one we considered in Gatto — no money was actually exchanged between the parties. See id. at 829 (noting that there was no genuine indebtedness when a “loan” was really a promise to pay money in the future). The assumptions made in the Opinion do not establish clear error on the part of the Tax Court. For that reason, I would affirm the Tax Court decision…

Richard M. Lipton, Baker & McKenzie, Chicago, IL, for the petitioners-appellants.

Bethany B. Hauser, Tax Division, U.S. Department of Justice, Washington, DC, for the respondent-appellee.

Before: A. WALLACE TASHIMA and JOHNNIE B. RAWLINSON, Circuit Judges, and JED S. RAKOFF, Senior District Judge. [*]

Opinion by Judge TASHIMA; Concurrence by Judge RAWLINSON.

TASHIMA, Circuit Judge:

This case requires us to decide whether a purported securities loan with a fixed term of at least 250 days and possibly as long as 450 days, entered into not for the purpose of providing the borrower with access to the lent securities, but instead for the purpose of avoiding taxable income for the lender, qualifies for nonrecognition treatment as a securities loan pursuant to § 1058 of the Internal Revenue Code (the "Code"), 26 U.S.C. § 1058 . [1] We hold that it does not.

As a general rule, any sale or other disposition of property is a taxable event. § 1001(c). Prior to 1978, there was some uncertainty regarding the application of this general rule to so-called securities lending transactions. These transactions were developed in response to the needs of securities brokers, who frequently faced…