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defense). To summarize, then, the burden rests on petitioners to
establish facts to overcome the determinations made in the notice
of deficiency or to support any revised position raised during
the examination of their 2000 return. Respondent, however, must
shoulder the burden of showing applicability of the duty of
consistency to the extent that respondent seeks to rely on the
doctrine to prevent petitioners from taking a position contrary
to one maintained in a prior year. See Janis v. Commissioner,
T.C. Memo. 2004-117 (noting the Commissioner’s burden of proof on
a duty of consistency defense), affd. 461 F.3d 1080 (9th Cir.
2006), affd. 469 F.3d 256 (2d Cir. 2006).
II. Treatment of Securities Transactions
A. Contentions of the Parties
Petitioners argue that gains and losses derived from
transactions in the E Trade account are properly treated as
ordinary, rather than capital, in nature. Their position in this
regard rests on two principal contentions. First, they assert
that the trades in the E Trade account are properly treated as
trades of Mr. Arberg, not Ms. Quinn. As support for this claim
they look to an alleged power of attorney, to trust law in the
State of Georgia, and to what they characterize as the “legal
preclusion doctrine”. Second, they maintain that Mr. Arberg
qualifies as a trader within the meaning of section 475.
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