- 21 -
salaries, tips, etc.” The results of Mr. Gordon's activities as
a securities trader for 1983 through 1990 that were reported in
the returns for those years ranged from income of $345,714 for
1988 to a loss of $324,723 for 1986. Ms. Gordon’s income from
her activities as a teacher for 1983 through 1990 that was
reported as “Wages, salaries, tips, etc.” in the Gordons' returns
for those years ranged from $19,822 for 1983 to $37,056 for 1989.
In Schedule C of their 1986 return, the Gordons reported a
loss of $324,723 (1986 claimed Schedule C loss) that consisted of
the net loss of $319,973 that Mr. Gordon sustained from trading
options on the AMEX as an options market maker and expenses of
$4,750 that he incurred in connection with that trading activity.
Based upon discussions with B&S, it was Mr. Gordon's understand-
ing that his 1986 net trading loss of $319,973 should be treated
as an ordinary loss in the Gordons' 1986 return. The Gordons
treated the 1986 Schedule C loss of $324,723 as an ordinary loss
in their 1986 return, used it to reduce $47,724 of income re-
ported in that return, and showed the balance of $276,999 of that
loss on page 1 of that return as "total income".
In a statement that was attached to their 1986 return, the
Gordons indicated that they had incurred a net operating loss for
1986 in an undisclosed amount and that, pursuant to section
172(b)(3)(C), they were making an election to relinquish the
carryback of that loss.
The Gordons reported in Form 2119 (Sale or Exchange of
Page: Previous 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 NextLast modified: May 25, 2011