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account in 1981, Dr. Richartz incurred a net of $913,230 in
ordinary losses and $1,713,090 in short-term capital losses, a
total net loss of $2,626,320. During 1981, Dr. Richartz did not
trade positions in which he had an unrealized gain of $2,656,440.
Those he retained and carried into January 1982. On his 1981
Federal income tax return, his net realized ordinary losses from T-
bill options and stock forwards in 1981, 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
$94 ($952,710) $952,615 1100%
1 Dr. Richartz's Federal income tax return for 1981 also
showed a short-term capital loss carryover from 1980 of $1,732.27
plus additional short-term capital losses of $3,426,248 and short-
term capital gains of $4,436,741.
(2) 1982 Merit Transactions
In January 1982, Dr. Richartz engaged in stock forwards trades
that produced short-term capital gains of $2,668,910. He withdrew
his remaining cash balance of $1,111,470 in January and February.
He made no trades in his Merit account until April. Dr. Richartz
then deposited $25,000 into his account and in September deposited
an additional $25,000. In 1982, he established 35 spread
transactions. In these spreads, Dr. Richartz engaged in 23 taxable
closing transactions. One of his trades resulted in a gain of
$56,800, and his records reflect the receipt of "other" income of
$3,807. The other 22 of these transactions, however, produced
losses which totaled $4,499,307. These losses consisted of
cancellation-fee ordinary losses of $191,792 and short-term capital
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