Stephen S. Wang, Jr. - Page 15

                                       - 15 -                                         

          insider information with respect to at least 19 companies.  The             
          five instances of selling insider information to Mr. Lee and Mr.            
          Cronin as set forth in the criminal charges were separate and               
          occurred over several months.  With respect to the other                    
          instances alleged in the civil and criminal documents, there is             
          insufficient detail to determine that petitioner's activity was             
          “frequent, regular, and continuous”.                                        
               On the basis of this record, we conclude and hold that                 
          petitioner’s sale of insider trading information was sporadic and           
          represented a limited opportunistic transactional relationship              
          with Mr. Lee. Accordingly, petitioner was not in a trade or                 
          business in connection with his insider trading activities.                 
               Petitioner contends that the legal expenses paid for his               
          defense in civil and/or criminal litigation that arose in                   
          connection with his sale of insider information are deductible              
          under section 162.  Respondent, however, argues that petitioner             
          is not entitled to a deduction because the legal expenses were              
          paid by his father.  Petitioner maintains that his father lent              
          him money to pay his legal expenses and argues that he intended             
          to repay his father as evidenced by promissory notes.                       
          Alternatively, petitioner argues that he is entitled to deduct              
          the legal fees because his father paid his legal expenses as a              
          gift to petitioner.  Because we have decided that petitioner was            
          not engaged in a trade or business in connection with his sales             





Page:  Previous  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  Next

Last modified: May 25, 2011