- 4 -
in his price being displayed on the appropriate securities
exchange. Petitioner's goal in employing the "on the book" bid
and asked method was to derive a profit from the "spread"
prevailing between bid and asked prices on the market.
Petitioner also purchased and sold futures contracts during 1988.
Petitioners reported all of their transactions in securities
and futures contracts on Schedule D of their 1988 Federal income
tax return as capital gains and losses, claiming a net capital
loss of $87,377 from such transactions.
In 1989, petitioner continued to serve as a registered
securities principal for Cadre until March of that year.
Petitioner was then unemployed until November 1989, when he began
working for Overseas Shipyards, Inc. (Overseas), shipyard
representatives providing ship building and repair services.
Petitioner served as a full-time employee of Overseas, working
approximately 35 hours a week. Petitioner's position with
Overseas did not involve dealing in securities.
Also during the 1989 taxable year, petitioner received a
$100,000 pension distribution (from which no Federal income tax
was withheld). In addition, petitioners reported as income on
their 1989 Federal income tax return $35,056.13 in wages, $5,635
in unemployment income, and $6,441 in interest and dividend
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