- 15 - In conclusion, we noted that tax benefits of Mr. Resser's option spread strategy "so far outweigh[ed] the economic profit potential" that we could not accept Mr. Resser's contention that he was primarily motivated by the desire to earn a profit. Id. Consequently, we sustained respondent's determination and disallowed the claimed losses from the account QRF TDY stock option transactions. With respect to the section 6661 addition to tax, we held that Mr. Resser's principal purpose for the stock option trading in account QRF was the avoidance of Federal income tax, and, therefore, the trading activity met the section 6661(b)(2)(C) definition of a "tax shelter". Because we concluded that Mr. Resser had no substantial authority for the tax treatment of his TDY trading in taxable year 1982, we sustained respondent's determination. We likewise sustained respondent's imposition of increased interest under section 6621(c) because Mr. Resser's stock option spread transactions were not entered into for profit and thus any underpayment based on those transactions was attributable to a tax-motivated transaction. OPINION As mandated by the Court of Appeals for the Seventh Circuit, we must decide whether the claimed losses generated by Mr. Resser's account QRF stock option spread transactions are "grossly erroneous items", as required by section 6013(e)(1)(B)Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
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