Gary K. Bielfeldt and Carlotta J. Bielfeldt - Page 3

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          Bielfeldt are husband and wife, and they resided in Peoria                  
          Heights, Illinois, when they petitioned the Court.  They are cash           
          method taxpayers, and they filed joint Federal income tax returns           
          for the subject years.  Their 1984 through 1988 tax returns were            
          prepared by Peat, Marwick, Mitchell & Co., or a successor thereto           
          (collectively, Peat, Marwick).  Their 1989 return was prepared by           
          Coopers & Lybrand.  Petitioner holds a bachelor's degree and a              
          master's degree.                                                            
               During the subject years, petitioner bought and sold                   
          Treasury securities, and his tax returns for those years reported           
          his sales as capital gains or capital losses.  Petitioner's 1984            
          return reported that he was an "investor" in Treasury securities.           
          Petitioner's 1985 through 1989 returns reported that he was a               
          "trader" in Treasury securities.  Petitioner notified respondent            
          of his claimed change in status by attaching a statement to his             
          1985 tax return that read in relevant part as follows:                      
               During 1985 the above-named taxpayer had a very extreme                
               change in the volume of trading activities conducted on                
               his own behalf.  The magnitude of trading activities                   
               now qualify the taxpayer as "trader" for tax purposes                  
               rather than an "investor".                                             
               Respondent audited petitioner's 1984 through 1989 taxable              
          years, and, at or about the same time, respondent audited the               
          related years of Bielfeldt & Co. (B&C) and its predecessor                  
          Bielfeldt, Lauritsen & Hagemeyer (BL&H), general partnerships in            







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