Alan M. Resser and Melinda B. Resser - Page 14

                                       - 14 -                                         
               [The taxpayer's] primary purpose in engaging in options                
               transactions, spread transactions, butterflies, and                    
               specifically the transactions in issue, was consistent                 
               with and part of his overall portfolio strategy to make                
               a profit.  Thus, the transactions had sufficient                       
               economic substance to be recognized for tax purposes.                  
               See Yosha v. Commissioner, 861 F.2d [494 (7th Cir.                     
               1988), affg. Glass v. Commissioner, 87 T.C. 1087                       
               (1986)] at 499.  [Laureys v. Commissioner, supra at                    
               134-133.]                                                              
          As a result, we disagreed with the Ressers' assertion that the              
          facts of their case were similar to those of Laureys and                    
          distinguished Laureys as follows:                                           
                    First, we note that the taxpayer in Laureys relied                
               almost exclusively on his trading activities in stock                  
               options as his sole source of income.  The taxpayer                    
               received practically no other income.  In contrast,                    
               petitioners had wages of approximately $250,000 as well                
               as consulting income in excess of $40,000.                             
               Petitioners' need for offsetting tax losses to reduce a                
               substantial amount of taxable income is apparent.                      
               Moreover, with other sources of income, it is evident                  
               that petitioners were not forced to rely on the TDY                    
               trading gains to earn a living.                                        
                    The taxpayer in Laureys engaged in market making                  
               for his own account on a full-time basis.  In the                      
               instant case, * * * [Mr. Resser] entered into just 9                   
               TDY spread transactions on only 6 days for his own                     
               account during the year (excluding the spread closed                   
               out in February 1982).  * * * [Mr. Resser] spent the                   
               majority of his time as a risk analyst, consultant, and                
               trading for the Bichon Venture Partnership/AMR account.                
                    The taxpayer in Laureys traded in at least eight                  
               different option classes whereas * * * [Mr. Resser]                    
               traded only TDY stock options in the QRF account.  In                  
               Laureys, the taxpayer attempted to vary his strategy                   
               behind the trades in his account.  He was sometimes                    
               bullish, sometimes bearish, and sometimes attempting to                
               capture a dividend.  * * * [Mr. Resser's] testimony is                 
               that he maintained a bearish strategy with respect to                  
               the TDY trades. * * *  [Resser v. Commissioner, T.C.                   
               Memo. 1991-423.]                                                       







Page:  Previous  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  Next

Last modified: May 25, 2011