But not able to mark-to-market, although William F. Poppe, 2015 T. C. Memo. 205, filed 10/19/15, is really a day trader, not an investor. Still, Judge Laro is sympathetic, though he disallows Poppe’s ordinary loss treatment and hits him with late filing chops.

Poppe is a school teacher, but his real job is day trading. Between classes and summers he racks up better than 700 trades during the years at issue, and most of his income comes from the swings and roundabouts.

But he files his return electing Section 475 treatment two years late, and never puts in the Form 3115 wherein he claims he elected the Section 475 largesse.

Judge Laro insists upon strict rules of golf. “This Court has on several occasions held that a securities trader failed to make an election under section 475(f) where the trader did not follow the election requirements of Rev. Proc. 99-17….

“We find that petitioner failed to comply with the requirements for the mark- to-market election set out in Rev. Proc. 99-17, supra. The evidence does not show conclusively whether petitioner signed or mailed a Form 3115 in 2003. Petitioner did not submit a copy of any executed version of Form 3115 or any evidence of mailing it. Respondent did not find any record of petitioner’s Form 3115 in his electronic database, but also admitted that in some years not all Forms 3115 received were actually entered in the database. Next, petitioner filed his Federal income tax return for 2003 on July 25, 2005, failing to comply with the filing deadlines. The 2003 tax return contained a statement that petitioner made an election pursuant to section 475(f), but did not have a Form 3115 attached to it. Thus, petitioner did not comply with the requirements of Rev. Proc. 99-17, supra.

“Petitioner argues we should find that he made a valid section 475(f) election under the substantial compliance doctrine. The substantial compliance doctrine has no place in determining whether a timely section 475 (f) election has been made. Rev. Proc. 99-17, supra, fixes a deadline by which the election must be made and the requirements for the election. Because petitioner failed to comply with the requirements of Rev. Proc. 99-17, he did not make an effective mark-to-market election in 2003.” 2015 T. C. Memo. 202, at pp. 16-17. (Citations and footnotes omitted).

Mark-to-market means the trader can take profits and losses on securities held at each calendar year’s end as if said securities were sold for their FMV, even if the securities in question never left the trader’s account. No wonder IRS insists upon strict rules of golf.

Poppe is out on ordinary gains and losses, and only has whatever capital gains and losses, short or long, actually realized, and gains offset losses. Any excess loss gets the $3K limitation.

But Poppe claims he has or had Asperger’s syndrome, so he couldn’t file timely, and brings in his trusty psychologist so to testify.

“Petitioner alleges that his mental impairment–an ASD previously known as Asperger’s Syndrome–constitutes reasonable cause for purposes of section 6651(a)(1) and (2). Petitioner offered testimony of a fact witness, L. G., Ph.D., to confirm his diagnosis. Mrs. G. [no, Judge, Doctor G.] is a licensed psychologist in the State of New York but is not a medical doctor. Mrs. G. has been petitioner’s psychologist since June 2013 and has been seeing petitioner approximately once a month. Mrs. G. testified that the condition petitioner suffered from was a chronic, pervasive, lifelong neurological disorder that manifests itself in impairment of some executive functions, poor social cognition, and high dependence on routines. Mrs. G. also opined that petitioner did not fully appreciate the seriousness of his failure to file his tax returns. We note that Mrs. G. was not petitioner’s treating healthcare provider in 2003 or 2007, the years at issue, and is not a medical doctor. For these reasons, we give her testimony minimal weight.” 2015 T. C. Memo. 202, at pp. 22-23. (Name omitted).

This being a nonpolitical blog, I will not comment on “Mrs.” as opposed to “Dr.,” nor the slighting reference to licensed psychologists in the State of New York. I am, however, thinking very loudly.

Anyway, during the years at issue Poppe was looking at six video screens, trading away, so despite Judge Laro’s sympathy, Poppe gets the chop.

Poppe did try the “financially disabled” gambit, Section 6511(h), but that fails, as he’s not talking about a refund or credit for overpayment of taxes while disabled. If you want the dope on financially disabled, see my blogpost “Elected, Depressed and Disabled,” 11/12/14. And note Sarah Kurko was claiming a credit from one year to offset a liability for another year, not a late filing or late payment situation.