David Cubeta was quoted regarding the effects of the Fifth Circuit's February 25th opinion in Pilgrim's Pride, which held that section 1234A only applies to the abandonment of derivative or contractual rights and not to the abandonment of capital assets.

Cubeta said that the Fifth Circuit created some uncertainty as to the continued application of section 1234A. Specifically, Cubeta noted that the Fifth Circuit's analysis calls into question whether section 1234A can apply to the cancellation of certain derivatives contracts that don't have underlying assets such as swaps. Cubeta stated, however, that the opinion is good news for the oil and gas industry where business is typically done in partnership form because it confirms that the abandonment of a dry hole through a partnership interest can be treated as an ordinary loss. The Tax Court's opinion, he said, "was directly assaulting the possibility of having an ordinary loss on the abandonment of a partnership interest even when you get nothing."