Cir

Petitioner-Appellant Kurt Sollberger (Sollberger) appeals from a decision of the United States Tax Court (the tax court), which concluded that he owes $128,979 in income tax for the 2004 taxable year. Sollberger entered into an agreement with Optech Limited (Optech) pursuant to which he transferred floating rate notes (FRNs) worth approximately $1 million to Optech in return for a nonrecourse loan of ninety percent of the FRNs’ value. The loan agreement gave Optech the right to receive all dividends and interest on the FRNs, and the right to sell the FRNs during the loan term without Sollberger’s consent. Instead of holding the FRNs as collateral for the loan, Optech immediately sold the FRNs and, based on the sale price, transferred ninety percent of the proceeds to Sollberger. Sollberger did not report that he had sold the FRNs in his 2004 federal income tax return.

We hold that Sollberger’s transaction with Optech constituted a sale for tax purposes, despite its taking the form of a loan, because the burdens and benefits of owning the FRNs were transferred to Optech. See Gray v. Comm’r, 561 F.2d 753, 757 (9th Cir.1977). Accordingly, we affirm the decision of the tax…