- 16 - as not derived in the ordinary course of a trade or business, i.e., it will be treated as portfolio income. In regard to this section, the report of the Senate Committee on Finance stated: “Although setting aside such amounts may be necessary to the trade or business, earning portfolio income with respect to such amounts is investment-related and not a part of the trade or business itself.” S. Rept. 99-313 (1986), 1986-3 C.B. (Vol. 3) 713, 729-730. We believe that petitioner’s gain is no more closely connected to his underwriting activities than would be interest earned on the investment of working capital, and, thus, it should be treated as not derived in the ordinary course of a trade or business. We conclude that petitioner’s gain is portfolio income and that he cannot utilize his passive losses to offset this gain. Decision will be entered under Rule 155.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Last modified: May 25, 2011