Lee B. Arberg and Melissa A. Quinn - Page 27




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          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)              







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