- 28 -
A.G.I. Merit A.G.I. Loss % of A.G.I.
Per Return Losses w/o Loss w/o Merit Loss
($6,649) ($450,901) $444,252 199%
1 The parties agree that Dr. Richartz also reported short-
term capital losses of $670,883 on his 1980 return. The statutory
notice for 1980 did not disallow these losses.
Dr. Richartz was also a partner in an entity known as Peng
Partners. Peng Partners maintained an account, designated account
No. 41, in Merit's T-bill options activity. In 1979, Dr. Richartz
reported from Peng Partners a guaranteed payment of a net $11,946,
plus his proportionate share of partnership gains and losses. In
1980, he reported income of $37,105 and his proportionate share of
Merit-related losses of $21,204.
(1) 1981 Transactions
(a) T-bill Options
Early in 1981, Dr. Richartz realized capital gains retained
from the prior year of $1,219,370. With the passage of ERTA, Dr.
Richartz terminated his investments in the T-bill program. In July
1981, he deposited cash of $37,000 and engaged in his last option
trades by opening and closing two sequences that produced a gain of
$24,340. He accordingly withdrew $61,340.
(b) Stock Forwards
Dr. Richartz began trading in Merit's stock forwards in
November 1981. He deposited cash of $1,068,880 and established
spread positions in 12 separate trades. The next month, his
"switch" transactions produced 17 taxable transactions in his stock
forwards account for 1981--all were losses. For his stock forwards
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