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transfer commission rebate. Hence, with a few concessions,
petitioners’ revised position essentially restructured the
reporting of their claimed business losses. The position did
not, however, alter the substance of their stance that activity
in the E Trade account should generate ordinary income and losses
because Mr. Arberg qualified as a trader in securities and that
various business expenses incurred by him were deductible under
section 162.
The examination culminated in the issuance of a notice of
deficiency to petitioners’ for 2000 on May 18, 2005. The notice
was based on the reporting in the original return. Respondent
therein disallowed all income and expenses claimed on the
Schedule C but permitted a portion of the disallowed expenses as
miscellaneous unreimbursed employee expenses (principally of Mr.
Arberg) or investment expenses (of Ms. Quinn) on Schedule A. The
attached explanation of adjustments noted, inter alia, that
“Melissa A. Quinn had not elected to use the Mark to Market
Accounting Method for her trades in securities or commodities”
and that petitioners had not established that the claimed
expenses were incurred and/or paid for ordinary and necessary
business purposes. The instant petition and litigation followed.
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