Stephen and Jane Marrin - Page 5

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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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