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allocating to petitioner all the gains and losses from the
account in his name only and one-half of the gains and losses
from the joint account held with Mrs. Corrigan. Respondent also
determined that the gains and losses were short-term. Finally,
respondent determined that petitioner had not substantiated the
deductions claimed on the Schedules C.
A. Substantiation of Schedule C Deductions
Even if petitioner shows that he was engaged in a trade or
business, he is obligated to show that deductions of expenses in
controversy are ordinary and necessary and were paid during the
year of deduction.
Petitioner did not introduce evidence showing that the
expenses deducted were ordinary and necessary and/or were paid
during the year of deduction. Therefore, petitioner is not
entitled to the deductions for expenses claimed on the Schedules
C for Corrigan Enterprises.
B. Dealer, Trader, or Investor
Generally, for Federal tax purposes, individuals who
purchase and sell securities have been characterized into one of
three categories: Dealers, traders, and investors. See Estate
of Yaeger v. Commissioner, T.C. Memo. 1988-264, affd. on this
issue 889 F.2d 29 (2d Cir. 1989). Petitioner concedes that he is
not a dealer, so any gains and losses would be capital in nature,
not ordinary. See sec. 1221(a)(6). The parties dispute whether
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