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reasonable relationship to the benefit petitioner got from owning
stock in New-East Bank.
Petitioners contend that petitioner's purchase of the stock
was not the purchase of a capital asset because he had no
investment motive when he bought the stock. We disagree. Stock
is generally a capital asset. Arkansas Best Corp. v.
Commissioner, 485 U.S. 212, 216-217, 219, 222-223 (1988). Buying
stock is not ordinarily an activity of a trade or business.
Higgins v. Commissioner, 312 U.S. at 216 (managing securities
investments and collecting income therefrom generally is not a
trade or business, regardless of the amount invested, continuity
of effort, or amount of time devoted to the activity).
Petitioners rely on Schanhofer v. Commissioner, T.C. Memo.
1986-166, where we held that the investment interest limitations
of section 163(d) did not apply to interest paid by a taxpayer
who borrowed money to buy stock in the company for which he
worked. That case is distinguishable. In Schanhofer, the
taxpayer paid a substantial premium for stock that was not
marketable. The stock in Schanhofer had minimal growth
potential. In contrast, petitioner bought unrestricted New-East
Bank stock and did not show that he paid more than fair market
value for the stock or that it had no growth potential.3 This
3 We did not consider sec. 163(h) in Miller v. Commissioner,
70 T.C. 448 (1978), and Schanhofer v. Commissioner, T.C. Memo.
1986-166, because it had not yet been enacted. We decided
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