- 40 -
affecting the treatment of the item in the return or a statement
attached to it. See sec. 6661(b)(2)(B); sec. 1.6661-3(a)(1),
Income Tax Regs., T.D. 8017, 1985-1 C.B. 379.
Petitioner did not file a brief or provide at trial any
authority (substantial or otherwise) regarding any of the
adjustments by respondent for the taxable years under
consideration. Accordingly, we consider whether petitioner’s
return contained adequate disclosure with respect to any of the
adjustments by respondent. The adequate disclosure requirement
under the regulations applicable for 1987 and 1988 is that the
disclosure must show, inter alia: “The facts affecting the tax
treatment of the item (or group of similar items) that reasonably
may be expected to apprise the Internal Revenue Service of the
nature of the potential controversy concerning the tax treatment
of the item (or items).” Sec. 1.6661-4(b)(1)(iv), Income Tax
Regs., T.D. 8017, 1985-1 C.B. 382.14
Concerning the claimed ordinary business deductions or
losses from stock trading activity, petitioner reported that he
was in the trade or business of buying and selling options, but
14 We decide these items on an item-by-item basis and,
ultimately, the parties’ Rule 155 computation will be necessary
to finally decide whether the threshold for application of the
substantial understatement addition applies in any of the years
under consideration.
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