King v. Comm'r of Internal Revenue

23 Citing cases

  1. Dagres v. Comm'r of Internal Revenue

    136 T.C. 263 (U.S.T.C. 2011)

    Investors who invest their own funds in public companies or in privately held companies earn investment returns; they are investing, not conducting a trade or business, even when they make their entire living by investing. “No matter how extensive his activities may be, an investor is never considered to be engaged in a trade or business with respect to his investment activities.” King v. Commissioner, 89 T.C. 445, 459, 1987 WL 45153 (1987) (citing Higgins v. Commissioner, 312 U.S. 212, 216, 218, 61 S.Ct. 475, 85 L.Ed. 783 (1941)). However, an activity that would otherwise be a business does not necessarily lose that status because it includes an investment function. Rather, the activity of “promoting, organizing, financing, and/or dealing in corporations * * * for a fee or commission or with the immediate purpose of selling the corporations at a profit in the ordinary course of that business” is a business, Deely v. Commissioner, 73 T.C. 1081, 1093, 1980 WL 4506 (1980) (citing Whipple v. Commissioner, 373 U.S. at 202–203), supplemented by T .C. Memo.1981–229, as is “developing* * * corporations as going businesses for sale to customers”, Whipple v. Commissioner, 373 U.S. at 203.

  2. Dagres v. Commissioner

    136 T.C. 263 (U.S.T.C. 2011)

    Investors who invest their own funds in public companies or in privately held companies earn investment returns; they are investing, not conducting a trade or business, even when they make their entire living by investing. "No matter how extensive his activities may be, an investor is never considered to be engaged in a trade or business with respect to his investment activities." King v. Commissioner, 89 T.C. 445, 459 (1987) (citing Higgins v. Commissioner, 312 U.S. 212, 216, 218 (1941)). However, an activity that would otherwise be a business does not necessarily lose that status because it includes an investment function. Rather, the activity of "promoting, organizing, financing, and/or dealing in corporations * * * for a fee or commission or with the immediate purpose of selling the corporations at a profit in the ordinary course of that business" is a business, Deely v. Commissioner, 73 T.C. 1081, 1093 (1980) (citing Whipple v. Commissioner, 373 U.S. at 202-203), supplemented by T.C. Memo. 1981-229, as is "developing * * * corporations as going businesses for sale to customers", Whipple v. Commissioner, 373 U.S. at 203.

  3. Reynoso v. Comm'r

    T.C. Memo. 2016-185 (U.S.T.C. Oct. 4, 2016)

    Traders are those engaged in the trade or business of selling securities for their own account. See King v. Commissioner, 89 T.C. 445, 457-59 (1987); Kay v. Commissioner, T.C. Memo. 2011-159. Their expenses reduce adjusted gross income, which means traders get bigger breaks on their taxes.

  4. Porter v. Comm'r

    T.C. Memo. 2015-122 (U.S.T.C. Jul. 1, 2015)   Cited 1 times

    Therefore, petitioner is considered an investor, as opposed to a dealer or trader, and he held the futures contracts and any other securities or commodities that gave rise to the losses as capital assets. See King v. Commissioner, 89 T.C. 445, 457-459 (1987); Arberg v. Commissioner, T.C. Memo. 2007-244, slip op. at 27-29; see also Fed. Nat'l Mortg. Ass'n v. Commissioner, 100 T.C. 541, 572 (1993). Sections 1211 and 1212 limit a taxpayer's recognition of losses from sales or exchanges of capital assets.

  5. Assaderaghi v. Comm'r

    T.C. Memo. 2014-33 (U.S.T.C. Feb. 25, 2014)   Cited 1 times
    Finding insufficient continuity and regularity when the taxpayer made over 700 trades with gross receipts of over $3 million over two years

    Accordingly, the proper taxation of gains and losses from a taxpayer's securities activity depends on whether he or she is a dealer, a trader, or an investor. See Estate of Yaeger v. Commissioner, 889 F.2d 29, 33 (2d Cir. 1989), aff'g in part, rev'g in part on another issue and remanding T.C. Memo. 1988-264; King v. Commissioner, 89 T.C. 445, 458-459 (1987). Petitioners contend that Mr. Assaderaghi was a trader in 2008 and 2009, while respondent contends he was an investor.

  6. Nelson v. Comm'r

    T.C. Memo. 2013-259 (U.S.T.C. Nov. 13, 2013)

    A person who purchases and sells securities may be a trader, a dealer, or an investor. See King v. Commissioner, 89 T.C. 445, 458-459 (1987). Neither party maintains that petitioner is a dealer.

  7. Endicott v. Comm'r

    T.C. Memo. 2013-199 (U.S.T.C. Aug. 28, 2013)

    "In general, for Federal tax purposes, a person who purchases and sells securities falls into one of three distinct categories: dealer, trader, or investor." Kay v. Commissioner, T.C. Memo. 2011-159, 2011 Tax Ct. Memo LEXIS 156, at *5 (citing King v. Commissioner, 89 T.C. 445, 458-459 (1987)). "Traders are engaged in the trade or business of selling securities for their own account."

  8. Mayer v. Commissioner

    67 T.C.M. 2949 (U.S.T.C. 1994)

    (1) The taxpayer's trading is substantial. King v. Commissioner [Dec. 44,174 ], 89 T.C. 445, 458-459 (1987); Paoli v. Commissioner, supra; Walker v. Commissioner [Dec. 47,007(M) ], T.C. Memo. 1990-609. In this regard, sporadic trading will not constitute a trade or business.

  9. Laureys v. Comm'r of Internal Revenue

    92 T.C. 8 (U.S.T.C. 1989)   Cited 49 times
    In Laureys, the taxpayer — an options trader — engaged in various stock option spread transactions and reported large losses, which were disallowed by the Commissioner for lacking an economic or profit motive because the taxpayer was never truly at risk due to the offsetting nature of the options.

    In analogous contexts, we have considered whether transactions conducted on a regular basis were ‘dealer‘ transactions. In King v. Commissioner, 89 T.C. 445 (1987), we considered whether certain commodities were held as a part of the taxpayer's trade or business or for investment within the meaning of section 163(d). In that context, we discussed the distinctions for tax purposes among a dealer, a trader, and an investor.

  10. Polakis v. Comm'r of Internal Revenue

    91 T.C. 42 (U.S.T.C. 1988)   Cited 5 times

    In the context of the case, our finding that the stock was a capital asset was synonymous with whether it was held with investment intent for purposes of section 163(d). King v. Commissioner, 89 T.C. 445, 462 (1987). We have previously limited our capital asset analysis and holding in Miller to the factual situation involved therein.