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MEMORANDUM FINDINGS OF FACT AND OPINION
LARO, Judge: Gary K. Bielfeldt and Carlotta J. Bielfeldt
petitioned the Court to redetermine respondent's determination of
deficiencies in, and additions to, their 1984 through 1988
Federal income taxes. Respondent determined the following
deficiencies and additions thereto:
Additions to Tax
Year Deficiency Sec. 6653(a)(1) Sec. 6661
1984 --- $32,514 ---
1985 $5,013,651 1,280,929 $1,253,413
1986 19,342,834 967,142 4,835,709
1987 6,871,323 343,566 1,717,831
1988 2,523,008 126,150 630,752
Respondent also determined that petitioners are liable for the
time-sensitive addition to tax under section 6653(a)(2) for each
of the taxable years from 1984 through 1987.
Following the trial of one of the issues arising in this
case, we must decide whether gains and losses realized by Gary K.
Bielfeldt (petitioner) on the disposition of U.S. Treasury
securities (Treasury securities) are ordinary or capital.
We hold they are capital. Unless otherwise stated,
section references are to the Internal Revenue Code in effect for
the relevant years.
FINDINGS OF FACT
I. Overview
Some facts have been stipulated and are so found. The
stipulated facts and exhibits submitted therewith are
incorporated herein by this reference. Petitioner and Ms.
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