Before 1981, commodity transactions were used to create "silver butterflies," "gold cash-and-carry transactions," and "T-bill rolls" to defer and convert ordinary income into capital gains. In June 1980, however, the process of tax reform in the commodity area began, and the butterflies began to take flight. The Economic Recovery Tax Act of 1981 (ERTA) enacted a set of new rules to reform the world of financial transactions, which at that time consisted mainly of commodity derivative transactions.
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