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income. During the year, petitioner bought and sold securities1
for his own account only, and used the "on the book" bid and
asked method exclusively in such transactions. Petitioner also
bought and sold futures contracts for his own account.
Petitioner purchased securities from and sold securities to
registered broker-dealers only. Petitioners claimed losses of
$224,355 from transactions in securities on Schedule C of their
1989 Federal income tax return.
In 1990, petitioner continued full-time employment with
Overseas. During the 1990 taxable year, petitioner received a
$152,000 individual retirement account (IRA) distribution (from
which no Federal income tax was withheld). In addition,
petitioners reported as income on their 1990 Federal income tax
return $52,062 in wages and $3,566 in interest and dividend
income. Petitioner continued to use the "on the book" bid and
asked method for securities transactions undertaken for his own
account during the year. Petitioner had no transactions in
futures contracts in 1990. Petitioners claimed losses of $98,378
1During 1989 and 1990, the taxable years in issue,
petitioner primarily transacted in a variety of options positions
which, by the nature of such securities, expired within 6 months.
In one instance during the years in issue, petitioner purchased
actual stock; all remaining transactions involved options
positions. The options positions taken and the stock purchased
are together referred to as "securities" hereinafter.
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