Page 11 - Acquisitions, Dispositions & Structuring Techniques Corner

permissible. The Court of Appeals reversed, nding that Cottage Savings had realized its losses through the transaction, but that it was not entitled to a deduction because its losses were not actually sustained for purposes of Code Sec. 165(a), which allows deductions only for bona de losses. The Supreme Court found that the properties exchanged were materially different and permitted Cottage Savings to
realize the claimed deductible loss.
28 See Federal Home Loan Mortgage Corp., 121 TC
254, Dec. 55,333 (2003).
29 See Burnet v. Logan, SCt, 2 ustc ¶736, 283 US
404, 51 SCt 550 (1931) (applying open trans- action doctrine until a transaction closed). In these instances, the component that is known is held in suspense and gain or loss is not realized until the missing component is
determined and the transaction is properly closed. The open transaction doctrine is an exception to the usual treatment arising from a sale or exchange of property for cash or other property. See also C.O. Dennis, CA-5, 73-1 ustc ¶9181, 473 F2d 274, 285, aff’g, 57 TC 352, Dec. 31,107 (1971).
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