Howard V. More - Page 1

                                           115 T.C. No. 9                                              

                                     UNITED STATES TAX COURT                                           

                                 HOWARD V. MORE, Petitioner v.                                         
                        COMMISSIONER OF INTERNAL REVENUE, Respondent                                   

                  Docket No. 4455-99.                   Filed August 15, 2000.                         

                        P is an individual underwriter for Lloyd’s of                                  
                  London (Lloyd’s).  As an underwriter, P is required to                               
                  demonstrate that he can cover potential losses on the                                
                  policies that he underwrites, a.k.a., show means.  In                                
                  order to show means, P posted a letter of credit issued                              
                  by Bank Julius Baer (BJB) with Lloyd’s.  The letter of                               
                  credit was secured by P’s preexisting stock portfolio.                               
                        The policies that P underwrote for the taxable                                 
                  years 1992 and 1993 incurred losses.  As a result of                                 
                  the losses, BJB sold P’s stock at a substantial gain                                 
                  during those years.                                                                  
                        P reported the losses from his underwriting                                    
                  activities as passive losses on his 1992 and 1993                                    
                  Federal income tax returns.  Additionally, P reported                                
                  the gain from the sale of stock by BJB as passive                                    
                  income.  P then offset the gain with the passive                                     
                  losses.  R contends that the gain recognized on the                                  
                  sale of stock is portfolio income, and portfolio income                              
                  cannot be offset by P’s passive losses.                                              

Page:   1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  Next

Last modified: May 25, 2011