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acquired as early as 1960, and petitioner did not begin
underwriting until the mid-1970's. Petitioner has not shown that
acquisition of any of the pledged stock was an ordinary and
necessary part of his underwriting activities. The evidence
indicates instead that petitioner acquired the pledged stock as
an investment. He merely pledged this investment asset to secure
the letter of credit that he needed for his underwriting
activities. The pledging of the stock did not convert
petitioner’s investment asset to an asset used in a trade or
business of underwriting. We do not find that petitioner’s
acquisition of the pledged stock was “made in the ordinary course
of a trade or business” as contemplated by subdivision (ii)(C).
Further, we believe petitioner’s gain is not the typical
type of income recognized by insurance companies or reinsurers on
their investment of insurance premiums. There is no evidence
that petitioner acquired the pledged stock with the premiums of
the policies underwritten. Nor does the record show that the
gain from the disposition of the pledged stock was committed to
his underwriting activities and not spent for personal purposes
such as living expenses. Consequently, we do not believe that
subdivision (ii)(C) was meant to encompass petitioner’s gain.
We also draw an analogy between petitioner’s gain and the
interest earned on the investment of working capital. Section
469(e)(1)(B) provides that any income, gain, or loss which is
attributable to an investment of working capital shall be treated
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