- 27 - the ordinary course of his trade or business”. Sec. 1221(a)(1); see also King v. Commissioner, supra at 457-458; Chen v. Commissioner, supra; Boatner v. Commissioner, supra. As a result, a dealer’s sales of securities are the equivalent of sales of inventory and produce ordinary gains and losses. E.g., King v. Commissioner, supra at 457-458; Chen v. Commissioner, supra; Boatner v. Commissioner, supra. Attendant business expenses are deductible under section 162(a) and interest is not subject to the restrictions under section 163(d) on the deduction of “investment interest”. E.g., King v. Commissioner, supra at 457, 460. Traders, like dealers, are engaged in the trade or business of selling securities, but they do so for their own account. E.g., Groetzinger v. Commissioner, 771 F.2d 269, 274-275 (7th Cir. 1985), affg. 82 T.C. 793 (1984), affd. 480 U.S. 23 (1987); Moller v. United States, 721 F.2d 810, 813 (Fed. Cir. 1983); King v. Commissioner, supra at 457-458; Chen v. Commissioner, supra; Boatner v. Commissioner, supra. Hence, their securities are not excluded from the definition of a capital asset due to the absence of customers, and sales thereof produce capital gains and losses under generally applicable principles. E.g., King v. Commissioner, supra at 457; Chen v. Commissioner, supra; Boatner v. Commissioner, supra. Because of the trade or business context, however, expenses are deductible under section 162(a)Page: Previous 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 NextLast modified: November 10, 2007