Taxed if company is hedger and speculator

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Suppose that on October 24, 2013, a company sells one April 2014 live-cattle futures contract. It closes out its position on January 21, 2014. The futures price (per pound) is 91.20 cents when it enters into the contract, 88.30 cents when it closes out the position and 88.80 cents at the end of December 2013. One contract is for the delivery of 40,000 pounds of cattle. What is the profit? How is it taxed if the company is (a) a hedger and (b) a speculator? Assume that the company has a December 31 year end.

Reference no: EM13976628

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