The Lays reported the sale of the annuity contracts on Schedule D showing no gain or loss.

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If a 754 election had been in effect, there would have been a lower flow-through of gain from the partnership and a modest or no gain or loss on liquidation.

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If the IRS follows the same rule for event-type CVRs, the issuer recognizes no gain or loss on the CVR issuance, the repurchase of the CVR, or the lapse of the CVR, but a target shareholder generally must recognize an immediate capital gain or loss taking into consideration the fair market value of the CVRs received on the date of distribution.

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These two positions therefore offset one another, and there is no net gain or loss on the straddle itself.

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Here again, these two positions offset one another and there is no net gain or loss on the straddle itself.

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