Frank Chen - Page 1

                                 T.C. Memo. 2004-132                                  

                               UNITED STATES TAX COURT                                

                              FRANK CHEN, Petitioner v.                               
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 1271-03.             Filed June 1, 2004.                    

                    During 1999, P incurred a net loss of $84,794 in                  
               connection with 323 transactions involving the purchase                
               or sale of securities, most of which P held for less                   
               than 1 month.  Approximately 94 percent (303) of those                 
               transactions occurred during February, March, and April                
               1999, with no transactions occurring in 6 of the other                 
               9 months.  Attached to P’s petition was a purported                    
               retroactive election under sec. 475(f)(1), I.R.C., of                  
               mark-to-market accounting, available to “traders in                    
               securities”, to be effective as of Jan. 1, 1999.  P                    
               claims that, pursuant to that election, he is entitled                 
               to treat the loss arising out of his 1999 trading                      
               activities as a fully deductible, ordinary loss                        
               incurred in a trade or business under sec. 165(c)(1),                  
                    1.  Held:  During 1999, P was not a “trader in                    
               securities” eligible to make a mark-to-market election                 
               under sec. 475(f)(1), I.R.C.                                           

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