- 23 -
asserts that the mere fact that he traded on his own account,
rather than on behalf of third parties, does not take him outside
the definition of a dealer.
Respondent replies that petitioner's gains and losses were
capital because he was not a dealer. Respondent asserts that
petitioner traded for his own account and that he had no
customers. Respondent asserts that petitioner had no separate
place of business to conduct his trading and that he used B&C's
resources to effectuate his trades. Respondent asserts that
petitioner did not register as a dealer with the SEC, NASD, or
Illinois secretary of state. Respondent asserts that petitioner
did not treat himself as a dealer on his tax returns as
originally filed.
We agree with respondent that petitioner was not a dealer in
Treasury securities during the subject years. To start with,
petitioner is incorrect in asserting that his Treasury securities
were his stock in trade or inventory, even if he did not hold the
securities for sale to customers. As courts have consistently
held, securities may be classified as stock in trade or inventory
only when they are held primarily for sale to customers in the
ordinary course of business. Marrin v. Commissioner, 147 F.3d
147, 152 (2d Cir. 1998), affg. T.C. Memo. 1997-24; United States
v. Wood, 943 F.2d 1048, 1051 (9th Cir. 1991); Swartz v.
Commissioner, 876 F.2d 657, 659 (8th Cir. 1989), affg. per curiam
T.C. Memo. 1987-582; United States v. Diamond, 788 F.2d 1025,
Page: Previous 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 NextLast modified: May 25, 2011