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Tybus v. Commissioner, T.C. Memo. 1989-309; Kobernat v.
Commissioner, T.C. Memo. 1972-132.
Mr. Kelly attempts to distinguish the many cases denying
ordinary loss treatment under similar circumstances on the ground
that he was a registered options principal. He argues that his
stock options fall within the literal terms of section 1221(1):
"stock options are a Registered Options Principal's 'stock in
trade'. Stock options are what a Registered Options Principal is
primarily involved in." Mr. Kelly's figurative use of the
statutory language finds no support in the case law interpreting
it. Property does not constitute "stock in trade" within the
meaning of section 1221(1) unless it is held by the taxpayer
primarily for sale to customers. Van Suetendael v. Commissioner,
152 F.2d 654, 654 (2d Cir. 1945), affg. a Memorandum Opinion of
this Court; Wood v. Commissioner, 16 T.C. 213, 225-226 (1951).
The functional significance of the registered options principal
to the operation of the securities market and his relationship to
a licensed dealer is not entirely clear from the record. For
purposes of characterizing Mr. Kelly's trading losses, however,
the only question is whether he was acting in the capacity of a
dealer when he engaged in the specific transactions that produced
the losses. Laureys v. Commissioner, supra; Kemon v.
Commissioner, supra. Mr. Kelly concedes that he did not engage
in these transactions in his capacity as a registered options
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