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fact and a decision may be rendered as a matter of law. See Rule
121(b); Elec. Arts, Inc. v. Commissioner, 118 T.C. 226, 238
(2002). We conclude that there is no genuine issue of material
fact regarding whether petitioners and SPK made effective mark-
to-market elections for Mr. Knish and SPK’s securities trading
activity, and a decision may be rendered as a matter of law.
Respondent argues that petitioners and SPK failed to make
effective mark-to-market elections under section 475(f) pursuant
to Rev. Proc. 99-17, 1999-1 C.B. 503. Respondent argues that
petitioners’ losses from the securities trading activity are
therefore capital losses regardless of whether the securities
trading activity was a trade or business.
Petitioners argue that as they are traders in securities,
they are entitled to ordinary loss treatment for their securities
trading losses in 2000 and 2001 (and their 100-percent share of
SPK’s securities trading losses) because they and SPK each made
effective mark-to-market elections under section 475(f).
General Rules of the Mark-to-Market Accounting Method
We begin by describing the general rules of the mark-to-
market accounting method. A taxpayer engaged in a trade or
business as a trader in securities may elect to recognize gain or
loss on any security held in connection with the trade or
business at the close of the taxable year as if the security were
sold for its fair market value at yearend. Sec. 475(f)(1)(A)(i);
see Lehrer v. Commissioner, T.C. Memo. 2005-167; Chen v.
Commissioner, T.C. Memo. 2004-132. In general, gains or losses
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