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Commissioner, T.C. Memo. 2004-132. In general, any gains or
losses resulting from the mark-to-market election shall be
treated as ordinary income or loss. Sec. 475(d)(3)(A),
(f)(1)(D). If a taxpayer is in the business as a trader in
securities and made a mark-to-market election with respect to
sales of securities held in connection with his business, his net
loss from that business would be an ordinary loss, deductible in
full under section 165; if the mark-to-market election is not
made, the net loss would be a capital loss deductible only to the
extent of any capital gains plus $3,000. See secs. 165(a), (c),
(f), 1211(b)(1); Chen v. Commissioner, supra.
In Chen we held that the taxpayer was not a “trader in
securities” for the relevant year for purposes of section 475(f)
and, therefore, did not address the taxpayer’s argument regarding
whether he should be permitted to make an untimely, retroactive
mark-to-market election because section 475(f) was not available
to him. As a result, we are presented with a novel issue:
whether an allegation contained in an amendment to petition
qualifies as an effective mark-to-market election.
2(...continued)
(i) such person shall 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 for its fair market value
on the last business day of such taxable year, * *
*
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