- 26 -
compensation through selling or licensing electronic marketing
software that he had developed.
After he established Merit and its related companies, Dr.
Richartz functioned principally as a market maker; he would take
positions that a customer might wish to make, but for which there
were no ready takers. Dr. Richartz would charge some "points" in
the process. As a market maker Dr. Richartz received interest on
his own excess margin deposits and paid no bid/ask premiums for his
trades on the Merit markets.
Dr. Richartz maintains a personal account, designated account
No. 51, in Merit's T-bill options activity. In 1979, he deposited
$25,000 with Merit. His trading followed the same open-switch-
close pattern as that of every other trader in Merit T-bills. It
was opened on December 13, 1979, and switched 15 days later on
December 28, 1979. The switch produced an ordinary loss deduction
of $77,440 for Dr. Richartz's 1979 tax return. Dr. Richartz
retained those positions in which he had a net unrealized gain of
$78,080 and carried them for 4 days into the next taxable year when
he closed the account. His realized losses from T-bill options in
1979, compared to his adjusted gross income in the same year, were
as follows:
A.G.I. Merit A.G.I. Loss % of A.G.I.
Per Return Losses w/o Loss w/o Merit Loss
$46,804 ($77,440) $124,244 62%
In 1980, Dr. Richartz's trading was somewhat more involved.
On January 4, 1980, he closed the 1979 trades he had initiated 3
Page: Previous 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 NextLast modified: May 25, 2011