Cummings v. Commissioner

Cummings (plaintiff), an MGM director, sold stock for a capital-gains profit and then repurchased shares within six months, triggering a statutory obligation under securities law to disgorge the resulting short-swing profit back to MGM; he deducted that repayment as an ordinary-income loss, but the IRS determined it should instead be classified as a long-term capital loss, a position the Tax Court initially rejected before the IRS appealed.