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the heading “RULING REQUESTED”, petitioner “[requests] Service
authority [to] implement mark-to-market accounting methods [sic]
to Jan. 1, 1999,” and he affirmatively states that he became a
daily trader effective as of that date.
OPINION
I. Background: Effect of Trader Status and a Mark-To-Market
Election Under Section 475(f)
Assuming that, during 1999, petitioner was engaged in a
trade or business (sometimes, without distinction, business) as a
“trader in securities”, he would have been eligible to elect to
“recognize gain or loss on any security held in connection with
such trade or business at the close of any taxable year as if
such security were sold at its fair market value * * * [at
yearend]”. Sec. 475(f)(1)(A)(i). In general, any gains or
losses with respect to such securities, whether deemed sold at
yearend under the mark-to-market method of accounting or actually
sold during the taxable year, “shall be treated as ordinary
income or loss.” Sec. 475(d)(3)(A), (f)(1)(D). If, during 1999,
petitioner was in business as a trader in securities and he made
a mark-to-market election under section 475(f)(1) with respect to
sales of securities held in connection with that business,
petitioner’s 1999 net loss from that business would be an
ordinary loss, deductible in full under section 165(c)(1).
Conversely, if petitioner is considered an investor in securities
during 1999, or, assuming trader status, he failed to make an
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