a cash-settled forward contract to come within the term "foreign currency contract". Foreign currency contracts can be physically settled or cash-settled, but they still must require, by their terms at inception, settlement at expiration. 13 The statute's plain language is dispositive. There is no evidence in the legislative history that a literal reading of the statute will defeat Congress' purpose in enacting it. Campbell v. Commissioner, supra at 62-63. Petitioners argue, by negative inference, that if the Secretary had wished to identify a foreign currency option as a "contract (or type of contract)" to be "[excluded] from the application of subparagraph (A)" of section 1256(g)(2), the Secretary would have exercised the authority, expressly delegated by subparagraph (B), to prescribe regulations for that purpose. We disagree. The Secretary has not issued regulations bringing a foreign currency option within the definition of a foreign currency contract. That determination is within the province of the Secretary, not within the province of this Court. Moreover, the statute, as we understand it, speaks for itself. Petitioners' contention that an option is a contract and that the addition by Congress of other option contracts to section 1256 over the years evidences an intent to include major foreign currency options also fails. Granted, an option is a contract and Congress has added other option contracts that qualify for section 1256 treatment. However, Congress' additions have been restricted to nonequity options, dealer equity options, and options on dealer securities futures, all of which are traded on a qualified board or exchange. Sec. 1256(b)(3)–(5), (g)(3)–(6). Interbank markets have not been designated as a qualified board or exchange. Sec. 1256(g)(7). When Congress has specified the types of contracts that come within the definition of a section 1256 contract, exclusion of others from its operation may be inferred. 14 There is no evi 13 The amendment is similar to that proposed by the Senate for cash-settlement of regulated futures contracts in 1982. See S. Rept. 97-592, at 276 (1982), 1983-1 C.B. 475, 485–486. 14 The maxim expressio unius est exclusio alterius, meaning that to express or include one thing implies the exclusion of the other, or of the alternative, applies. Black's Law Dictionary 661 (9th ed. 2009); see United States v. Smith, 499 U.S. 160, 167 (1991) ("Where Congress explicitly enumerates certain exceptions * * * additional exceptions are not to be implied, in the absence of evidence of a contrary legislative intent."" (quoting Andrus v. Glover Constr. Co., 446 U.S. 608, 616–617 (1980))). dence of legislative intent to designate foreign currency options as section 1256 contracts. Petitioners also contend that futures, forwards, and options "accomplish the same economic access to currency risk" and should be treated the same way under the tax laws. However, petitioners admit that futures, forwards, and options differ in their pricing, timing, and payment structures. It is precisely these economic and legal distinctions that give rise to disparate treatment under the tax laws. VII. Conclusion and Holding With respect to the first issue presented to us by respondent's motion for partial summary judgment, we hold that under section 1256, the major foreign currency option assigned by Summitt to the charity is not a foreign currency contract as defined in section 1256(b)(2) and (g)(2), and the marked-to-market provisions of section 1256 do not apply to the transfer of the EUR call option (3032) to the charity. As a result, petitioners did not recognize a loss in 2002 on the EUR call option (3032) pursuant to section 1256. The second issue raised by respondent's motion for partial summary judgment deals with the recognition of gain upon assignment of the minor foreign currency call option to charity. That issue cannot be dealt with isolated from the facts involved in the transaction as a whole, and therefore, respondent's motion on the second issue will be denied. To reflect the foregoing, An appropriate order will be issued. SCOTT E. RUBENSTEIN, TRANSFEREE, PETITIONER V. RESPONDENT Docket No. 1254-06. Filed June 7, 2010. For many years P has lived with and cared for his father in Florida. In 2003 P's father, who was insolvent and had substantial unpaid income tax liabilities, transferred to P, for little or no consideration, the condominium in which they both resided. The IRS had previously determined, for purposes of calculating his reasonable collection potential, that P's father had zero net equity value in the condominium. After the Scott E. Rubenstein, pro se. Timothy Sloane and Sergio Garcia-Pages, for respondent. THORNTON, Judge: Respondent determined that pursuant to section 6901 petitioner has transferee liability of $44,681, plus interest as provided by law, arising from his father's transfer to him of a Florida condominium. 1 Petitioner contends and respondent does not appear to dispute that the condominium qualified for homestead exemption under Florida law. The issues for decision are: (1) Whether the transfer was constructively fraudulent pursuant to section 726.106(1) or (2) of Florida's Uniform Fraudulent Transfer Act (FUFTA), codified at Fla. Stat. Ann. secs. 726.101 to 726.112 (West 2000); and (2) whether respondent is equi 1 Unless otherwise indicated, all section references are to the Internal Revenue Code, and all Rule references are to the Tax Court Rules of Practice and Procedure. All figures have been rounded to the nearest dollar. tably estopped from asserting transferee liability against petitioner. FINDINGS OF FACT The parties have stipulated some facts, which we so find. When he petitioned the Court, petitioner resided in Florida. Petitioner's Care for His Father In 1989, with his mother's health in decline, petitioner moved from his home in New Jersey to live with his parents in Florida. In 1993 his mother passed away. Since then, petitioner has continued to live with to live with his father, Jerry Rubenstein, in Florida. While living with his father, petitioner has provided care for him. They have had no understanding or agreement that petitioner would be compensated for these services. Instead, petitioner has been motivated to care for his father by love, honor, respect, and devotion. Petitioner has never been a licensed caregiver or engaged in business as a caregiver for profit. The Condominium In March 2002 Jerry Rubenstein purchased for $35,000 a condominium in Delray Beach, Florida (the condominium). He and petitioner have since resided there together. On February 21, 2003, Jerry Rubenstein transferred the condominium to petitioner by warranty deed for stated consideration of $10 and "other good and valuable consideration”. That same day, petitioner recorded the warranty deed with the Clerk and the Comptroller of Palm Beach County, Florida. The fair market value of the condominium was then $41,000, and there were no liens or other encumbrances on the condominium (without consideration of any Federal tax lien). On July 22, 2004, petitioner mortgaged the condominium to secure a revolving credit agreement with a bank. Jerry Rubenstein's Financial Circumstances and Tax Liabilities As of February 21, 2003-the day he transferred the condominium to petitioner-Jerry Rubenstein was insolvent and unable to pay his debts. Petitioner was aware of this fact. Jerry Rubenstein's debts included $112,420 that he owed the United States for unpaid Federal income taxes, penalties, and interest for his taxable years 1994 through 2002. 2 On May 13, 2002, Jerry Rubenstein had submitted to the Internal Revenue Service (IRS) an offer-in-compromise of $10,000 to settle his income tax liabilities for taxable years 1994 through 2001. By letter dated November 8, 2002, the IRS had rejected his offer-in-compromise on the ground that the amount offered was less than his reasonable collection potential (RCP) of $34,475. According to an asset/equity table attached to the rejection letter, in calculating Jerry Rubenstein's RCP the IRS had determined that his "Net Realizable Equity” in the condominium was zero. 3 On September 29, 2004-some 18 months after Jerry Rubenstein had transferred the condominium to petitioner— the IRS filed, for the first time, a notice of Federal tax lien with respect to Jerry Rubenstein's unpaid assessments for income taxes, penalties, and interest for the years 1994 through 2002. Notice of Transferee Liability By notice dated October 17, 2005, the IRS determined that petitioner had liability of $44,681, plus interest as provided by law, as Jerry Rubenstein's transferee of the condominium, with respect to Jerry Rubenstein's unpaid income tax, penalties, and interest for taxable years 1998 through 2002. A. Transferee Liability OPINION Respondent contends that pursuant to section 6901(a), petitioner, as the transferee of the condominium from his father, is liable for $41,000 plus "statutory interest" for 2 In making this finding of fact, we have adhered to the parties' stipulation as to Jerry Rubenstein's accrued tax debts. It might be argued that Jerry Rubenstein's tax debt for 2002 accrued no earlier than Apr. 15, 2003, the due date of his 2002 income tax return. See Roland v. United States, 838 F.2d 1400, 1403 (5th Cir. 1988). Petitioner, however, has made no such argument. In any event, any such argument would not avail petitioner since Jerry Rubenstein's tax debts for years before 2002, as accrued on the date of the transfer, appear to exceed the condominium's value as of that date. 3 The table lists "Real Estate" with a fair market value of $41,000 and "Quick Sale Value" of 80 percent of this amount, i.e., $32,800, offset by $32,800 of "Encumbrances or Exemptions", to arrive at net realizable equity in the real estate of zero. The parties appear to agree that the real estate referenced in this table is Jerry Rubenstein's condominium that he later transferred to petitioner. |