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Mr. Resser's Schedule C loss reduced petitioners' adjusted gross
income significantly. Petitioners' 1982 Federal income tax
liability was zero.
In the notice of deficiency, respondent disallowed Mr.
Resser's account QRF TDY stock option spread losses and expenses
on the basis that the transactions were "not profit motivated."
At trial, respondent contended that Mr. Resser's trades were
motivated primarily by tax considerations and were a blatantly
obvious attempt to offset all earned wages and other income.
Petitioners argued that Mr. Resser entered into the TDY option
transactions to generate a profit and that his TDY option trading
constituted a trade or business. Petitioners relied on Laureys
v. Commissioner, 92 T.C. 101 (1989), a case involving a
registered market maker with the CBOE who engaged in TDY option
spread transactions similar to Mr. Resser's TDY spreads.
In Resser I, we held that the account QRF losses were not
deductible under section 165 because Mr. Resser lacked the
requisite profit motive when he engaged in the transactions.
With respect to section 165(c)(1), we found that Mr. Resser was
involved in four distinct income-earning activities during 1982:
(1) His employment as a risk analyst for traders clearing through
Rialcor (with compensation of $236,550); (2) his daily activities
on behalf of Bichon Venture Partnership (his portion of which was
reported on Schedule E of petitioners' 1982 Federal income tax
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