Richard Kay, Jr v. Comm’r – Trader or Investor, Sometimes it Feels like a Coin Toss
Richard Kay, Jr v. Comm’r., T.C. Memo. 2011-159 (July 6, 2011) is yet another case that tackles the facts and circumstances query of a trader v. investor. Facts and circumstances is one of those things that you really cannot be sure what would come out of. Many would argue that in cases that turn on the facts and circumstances inquiry there is a very high element of chance and sometimes they feel more or less like a coin toss.Why does the question of a trader v. investor matter to many people? Well, if a person buys and sells the same securities within the taxable year, in either case...
July 07, 2011 read more
Tax Court: Fund Manager Gets Business Bad Debt Treatment for Loan to Advisor
Fund managers' compensation typically consists of two elements: a management fee--generally 1-2% of NAV (which in addition to paying the managers, is applied toward other operating expenses), and a performance fee--generally 20% of gains. In addition, fund managers may receive an investment return from any capital they invest into the fund (typically, around 1% of the fund's capital). The Tax Court's holding in Todd A. Dagres et ux. v. Commissioner; 136 T.C. No. 12 (March 28, 2011), indicates that the relative amouints of these components can be determinative of the issue of whether a...
April 04, 2011 read more