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as the operator and sole proprietor of an activity in which he
claimed to be engaged in the trade or business of buying and
selling options and commodities.
Petitioner claimed and respondent disallowed a theft loss of
$21,000 for 1987. Petitioner’s claim was on the basis of a
report he filed with the local police reflecting a $21,000 theft
of cash from his Newport Beach home. There was no evidence of
forced entry, and petitioner’s claimed theft was not solved or
verified by local authorities. Petitioner did not seek
reimbursement of the claimed $21,000 loss from his homeowner’s
insurance company.
During 1987 through 1991, petitioner was employed by Smith
Barney as an account executive in Newport Beach, California. He
earned commissions of $1,081,313, $321,692, $527,900, $361,105,
and $205,064 for 1987, 1988, 1989, 1990, and 1991, respectively.
On his 1987 through 1991 returns, petitioner claimed and
respondent disallowed expenses for work-related travel as
itemized deductions on the Schedules A, Itemized Deductions,
attached to each return.
Smith Barney, as a broker, and petitioner, as a Smith Barney
employee, dealt in syndicated stock offerings during 1987 and
1988, which differed from regular stock transactions in that the
underwriting of the stock involved risk to the broker. Because
of the increased risk, the transaction commissions were
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