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losses of $4,307,515. They offset his long-term capital gain of
$2,668,910 incurred in the previous January, leaving him with a net
capital loss of $1,826,589. This amount was used to offset other
capital gains and to add to his capital loss carryover.
Dr. Richartz also retained and carried unrealized income of
$1,857,057 in the "gain" legs of his 1982 stock forwards into his
next taxable year or the year following.
Dr. Richartz's reported ordinary losses from Merit stock
forwards in 1982, compared to his taxable income in the same year,
were as follows:
T.I. Merit A.G.I. Loss % of A.G.I.
Per Return Losses w/o Loss w/o Merit Loss
$2,8871 ($191,792) $194,679 99%
1 Dr. Richartz's adjusted gross income was $208,894. He
deducted Merit stock forwards cancellation fees of $191,792 for
that year, however, reducing his income by that amount.
(3) 1983 Merit Transactions
In 1983, Dr. Richartz neither added to nor subtracted from his
cash account for the stock forwards account. He engaged in no
taxable transactions until July. At that time he began trading,
and by November he had realized net short-term capital gains of
$736,285 and long-term capital gains of $1,437,766. In December
1983, however, he incurred cancellation losses of $65,448 and
short-term capital losses of $2,234,054. In that month, he
realized an additional $55,342 in long-term capital gains, but the
overall effect of these trades (including "other" income of $8,301)
was to leave him with a net loss of $61,807 at the end of 1983.
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