- 7 -
Commissioner, supra at 34; see also Whipple v. Commissioner, 373
U.S. 193, 202 (1963); Higgins v. Commissioner, supra at 217;
Paoli v. Commissioner, supra; Beals v. Commissioner, T.C. Memo.
1987-171. This result is the same notwithstanding the amount of
time the individual devotes to the activity. Mayer v.
Commissioner, supra. Even “full-time market activity in managing
and preserving one’s own estate is not embraced within the phrase
‘carrying on a business,’ and * * * salaries and other expenses
incident to the operation are not deductible as having been paid
or incurred in a trade or business.” Commissioner v.
Groetzinger, supra at 30. Instead, an investor’s expenses may be
deductible under section 212 to the extent that expenses were
incurred in the production of income.4 Sec. 212; Whipple v.
Commissioner, supra at 200; United States v. Gilmore, 372 U.S.
39, 45 (1963).
In determining whether a taxpayer who manages his own
investments is a trader, nonexclusive factors to consider are:
(1) The taxpayer’s investment intent, (2) the nature of the
income to be derived from the activity, and (3) the frequency,
extent, and regularity of the taxpayer’s securities transactions.
Moller v. United States, supra at 813. For a taxpayer to be a
4 In contrast to trade or business expenses, a taxpayer’s
investment-related expenses that are deductible under sec. 212
are subject to a limitation under sec. 67(a) and do not reduce
alternative minimum taxable income.
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