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On April 13, 2000, Mr. Pearce met with petitioner to obtain
his signature on Form 4868, Application for Automatic Extension
of Time to File U.S. Individual Income Tax Return, for taxable
year 1999. On April 17, 2000, petitioner timely filed Form 4868,
requesting an extension until August 15, 2000, to file his return
for taxable year 1999. A section 475(f) election was not
enclosed with the Form 4868, however, because Mr. Pearce did not
know about the availability of section 475(f) or any Internal
Revenue Service (IRS) revenue procedure related to securities
traders.
On or about June 4, 2000, Dr. James G. Sullivan (Dr.
Sullivan), a friend of petitioner, visited petitioner at his
home. Petitioner told Dr. Sullivan that he had suffered
significant losses during the first quarter of the 2000 taxable
year and that, consequently, his DLJdirect account had been
liquidated on April 14, 2000. Dr. Sullivan knew several
professional “day traders” and informed petitioner that he might
be able to deduct his securities trading losses as ordinary
losses.
On June 6, 2000, petitioner spoke with another accountant,
Charles E. Sellers (Mr. Sellers), regarding the possibility of
deducting his securities trading losses as ordinary losses. Mr.
Sellers also was unaware of section 475(f) and the mark-to-market
election available to securities traders. Petitioner retrieved
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