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trader, the trading activity must be substantial, which means
“frequent, regular, and continuous enough to constitute a trade
or business” as opposed to sporadic trading. Ball v.
Commissioner, T.C. Memo. 2000-245. A taxpayer’s activities
constitute a trade or business where both of the following
requirements are met: (1) The taxpayer’s trading is substantial,
and (2) the taxpayer seeks to catch the swings in the daily
market movements and to profit from these short-term changes
rather than to profit from the long-term holding of investments.
Mayer v. Commissioner, supra. Respondent concedes that petitioner
meets the second requirement; thus, we focus on the first
requirement.
As to the first requirement, we find petitioner’s trading
activity was not substantial. Courts consider the number of
executed trades in a year and the amount of money involved in
those trades when evaluating whether a taxpayer’s trading
activities were substantial. See, e.g., Mayer v. Commissioner,
supra; Paoli v. Commissioner, supra. In Paoli, the Court held
trading activities were substantial when the taxpayers traded
stocks or options worth approximately $9 million. In Mayer, the
Court considered over 1,100 executed sales and purchases in each
of the years at issue there to be substantial trading activity.
Trading activity was found to be insubstantial when a taxpayer
executed at most 83 purchases and 41 sales in one year and 76
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