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expenses are deductible, they are deductible as “below the line”
deductions pursuant to section 212. We agree with respondent.
The Internal Revenue Code does not define the term “trade or
business”. Commissioner v. Groetzinger, 480 U.S. 23, 27 (1987);
Estate of Yaeger v. Commissioner, 889 F.2d 29, 33 (2d Cir. 1989),
affg. 92 T.C. 180 (1989). Whether petitioner’s activities
constituted a trade or business is a question of fact. See
Higgins v. Commissioner, 312 U.S. 212, 217 (1941); Estate of
Yaeger v. Commissioner, supra at 33; Mayer v. Commissioner, T.C.
Memo. 1994-209; Paoli v. Commissioner, T.C. Memo. 1991-351.
Petitioner has the burden of proof. See Rule 142(a)(1); Welch v.
Helvering, 290 U.S. 111, 115 (1933).3
In determining whether a taxpayer’s trading activities
constituted a trade or business, courts have distinguished
between “traders” and “investors”. Moller v. United States, 721
F.2d 810, 813 (Fed. Cir. 1983); see also Levin v. United States,
220 Ct. Cl. 197, 597 F.2d 760, 765 (1979). Management of
securities investments, regardless of the extent and scope of
such activity, is seen as the work of a mere investor, “not the
trade or business of a trader.” Estate of Yaeger v.
3 Under sec. 7491(a)(1), the burden of proof may shift to
the Commissioner if the taxpayer introduces credible evidence
with respect to any factual issue relevant to ascertaining the
taxpayer’s proper tax liability and meets certain requirements
under sec. 7491(a)(2). Petitioner did not raise an issue as to
the application of sec. 7491, and we find that section is
inapplicable to this case.
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