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By Notice of Determination Concerning Collection Action(s)
Under Section 6320 and/or 6330, Appeals determined that the
proposed collection action (levy) for 1999 should proceed. An
attachment to the notice explains that (1) petitioner’s claim for
a loss carryback was not timely and (2) since he had raised no
collection alternative, collection by levy was correct.
OPINION
Petitioner challenges his underlying liability for 1999, and
respondent agrees that petitioner’s liability is appropriately
before the Court. See sec. 6330(c)(2)(B).
Petitioner was a trader in securities during 1999 and 2000.
The parties have stipulated that he had no customers for his
trading activity in 1999, and he has failed to show (and does not
claim) that he had any customers for that activity in 2000. Due
to the fact that he did not have customers, he was not a dealer,
and he must treat the securities that he bought and sold as
capital assets.2 His net capital loss for 2000 could, therefore,
2 As we recently described the situation in Chen v.
Commissioner, T.C. Memo. 2004-132:
In general, for Federal tax purposes, a person who
purchases and sells securities falls into one of three
distinct categories: dealer, trader, or investor. See
King v. Commissioner, 89 T.C. 445, 458-459 (1987).
Both traders and dealers are engaged in the trade or
business of buying and selling securities. Only the
dealer’s business, however, involves sales to customers
in the ordinary course of that business. Consequently,
only the dealer’s securities fall within the exception
to capital asset status that is provided for “property
held by the taxpayer primarily for sale to customers in
the ordinary course of his trade or business”. Sec.
1221(a)(1). Thus, “traders * * * occupy an unusual
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Last modified: November 10, 2007