Lee B. Arberg and Melissa A. Quinn - Page 9




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               For 1999, Mr. Arberg again filed a separate return showing             
          wage income ($84,114 (rounded) from Lasertron) and also attaching           
          a Schedule C for a “MARK TO MARKET TRADING” business.  The                  
          Schedule C reported gross income of zero, expenses of $34,779               
          (comprising $2,790 for car and truck expenses, $20,754 for travel           
          expenses, and $11,235 for other expenses), and a net loss of                
          $34,779.  The $11,235 for other expenses was described as:  “LOSS           
          ON MARKET TRADES AND HOLDINGS AT DECEMBER 31, 1999”.  An attached           
          schedule listed three securities lots, each with a respective               
          date acquired and date sold between February 3 and October 13,              
          1999, for the $11,235 total net loss on the transactions.  These            
          trades were apparently conducted through an account in                      
          Mr. Arberg’s name at Salomon Smith Barney.  As in 1998, a                   
          Schedule D was also attached to the 1999 return and bore the                
          notation “TAXPAYER HAS ELECTED BO [sic] BE A MARK TO MARKET                 
          TRADER UNDER IRC SECT. 475(F)(1)(A)”.                                       
               Ms. Quinn likewise filed a separate return for 1999.  The              
          return reported, inter alia, wage income of $131,730 and net                
          short-term capital gains from Schedule D of $196,121.  The                  
          $196,121 in net short-term capital gains was derived from gross             
          short-term sales proceeds of $761,300 shown on the Schedule D.              
          The trades underlying the reported capital gains on stock sales             
          were conducted through the E Trade account in Ms. Quinn’s name.             








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