Lee B. Arberg and Melissa A. Quinn - Page 1

                                 T.C. Memo. 2007-244                                  

                               UNITED STATES TAX COURT                                

                 LEE B. ARBERG AND MELISSA A. QUINN, Petitioners v.                   
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 15376-05.             Filed August 27, 2007.                

                    Prior to 1999, a brokerage account at E Trade                     
               Securities, Inc., was established in the name of P-W.                  
               For 1999, P-W filed a separate return reporting capital                
               gain income from activity in the E Trade account.  For                 
               2000, Ps contend that losses generated in the E Trade                  
               account are entitled to ordinary income treatment by                   
               reason of a business of P-H as a trader in securities                  
               and that various expenses should be allowed as                         
               deductions of the securities trading business and/or a                 
               consulting business of P-H.                                            
                    Held:  Gains and losses in the E Trade account                    
               must be attributed to P-W and are capital in nature.                   
                    Held, further, Ps are not entitled to expense                     
               deductions in excess of those allowed by R.                            
                    Held, further, Ps are liable for the accuracy-                    
               related penalty pursuant to sec. 6662, I.R.C., for                     

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