US Tax Court Upholds '1,500 Trades Makes A Trader' Rule

Law360, New York (November 13, 2013, 6:34 PM EST) -- The U.S. Tax Court on Wednesday hit a taxpayer with almost $800,000 in back taxes and fines for claiming she was a “trader” as defined by the Internal Revenue Code for the purposes of deducting business expenses, after the woman failed to make at least 1,500 trades in a year.

The court upheld a tradition of close scrutiny when it comes to day traders that attempt to claim securities trader business-expense tax deductions, even when the day trader invests millions.

Over a two-year period, Sharon Nelson...
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