- 41 -
he was not and he failed to disclose that he was a broker or
dealer in options. See, e.g., Little v. Commissioner, T.C. Memo.
1993-281, affd. 106 F.3d 1445 (9th Cir. 1997).
In conjunction with the option trading question, we
allocated between petitioner and Mrs. Corrigan the capital
gains/losses from three separate accounts for 1987, 1990, and
1991. We note that of the three accounts in question, one was in
petitioner’s name, one in Mrs. Corrigan’s, and one was jointly
held between petitioner and Mrs. Corrigan. Petitioner and Mrs.
Corrigan (from whom he was divorced at all pertinent times)
attempted to file joint returns for 1987 through 1991. As a
matter of law, they were not entitled to do so. Accordingly, we
held that petitioner was not entitled to combine the gains and
losses of the three accounts for reporting purposes. There was,
however, no disclosure made on the returns indicating that
petitioner and Mrs. Corrigan were divorced or that they were
otherwise justified in filing a joint return. Likewise, it was
not reasonable to claim joint filing status at a time when
petitioner knew he was divorced. There was therefore no adequate
disclosure or reasonable cause for the position reported by
petitioner. We accordingly hold that the substantial
understatement addition is applicable with respect to this
adjustment for 1987.
Page: Previous 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 NextLast modified: May 25, 2011