the
whipsaw effect varies inversely with the probability that the case
Hence, a taxpayer in this situation faces an interest-rate
whipsaw that another taxpayer may avoid.
If the
whipsaw is applied against taxpayers, the results will be catastrophic.
A
whipsaw case is one in which the IRS is confronted by conflicting claims by different taxpayers, often divorcing spouses, concerning the same transaction.
The IRS appeared to be concerned that by clearly allowing taxpayers to claim capital treatment for termination payments, it was granting them a wide degree of latitude to selectively "
whipsaw" the government.
When power prices might
whipsaw, derivatives can help.
equities are back under pressure after
whipsaw trading overnight following a WSJ report that Apple had cut production targets on certain iPhones, along with antitrust accusations leveled at Micron by Chinese authorities (FT) and a frosty dialogue between U.S.
Neither form of error should trigger an ordinary gain/capital loss
whipsaw against the taxpayer?
According to the Preamble, the IRS chose the "disposition approach" over the "lock-in approach"(9) for a number of reasons including: (1) to eliminate the practical need for costly E&P studies to determine stock basis; (2) to eliminate the need for transitional rules to address
whipsaw and planning opportunities arising from duplication or omission of items under duplicate systems; (3) to eliminate the need to maintain both systems for an indefinite time, and thereby avoiding significant compliance and guidance burdens for both the taxpayers and the government; and (4) to give force to section 1503(e)(1)(A), which requires modifications to stock basis-- retroactive to 1972--that are similar to modifications under the proposed rules.