Yet Another “Trader” Argument Doomed at the Tax Court Level
As I’ve been following and discussing here on this blog, in the last few years the Tax Court has been on a roll. Everything that comes through its doors related to trader status and claiming ordinary losses from trading activities appears to be doomed from the get go if the taxpayer is an individual and does not carry on trades every single day of the year. God forbid the trader has another occupation from which it derives the majority of its income. That makes the Tax Court’s test for trader status almost impossible to meet for any non-trader professional that may be trading as...
February 26, 2014 read more
Henricus v. Comm’r.: a Trader v. Investor Déjà vu
It seems like as of late the Tax Court is set on slamming every person that comes through its doors claiming a trader status. It feels like it was yesterday when I talked about the Richard Kay case on this blog. There I alluded that a taxpayer who seemed to fall within the category of what most people in the trading community would call a swing trader ended up being treated as an investor. On top of that the taxpayer was hammered with a Section 6662 penalty. Well, roll forward a few months and we have the same story all over again. The Tax Court just decided the following case Henricus...
September 30, 2011 read more
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