Quote from jwishcamper:
Hi RCMâ
The insurance providerâs position would come as a shock to Congress, the IRS, the federal courts, lawyers and accountants throughout the country. The body of case law where it has been determined that trading stocks or commodities CAN rise to the level of a business is voluminous. Congress recognized that by enacting IRS Section 475(f), which accords the mark-to-market election to traders [who, by definition, are trading for their own account and not for third persons; if they were trading for third persons, they would be âdealersâ and would fall under a different but similar set of rules].
One case out of hundreds that holds that a taxpayerâs trading activities constituted a business for purposes of the Internal Revenue Code is Levin vs. U.S., 597 F2d 760 (Ct. Cl. 1979). There are many other cases that hold the same. There is no requirement for third party transactions before an activity can be a business. This insurance company can impose whatever underwriting requirements it wants (as long as it does not violate regulations of the state insurance commissioner), but this âthird party transactionsâ condition is without any foundation in the law.
If you want to pursue this, I recommend you contact the state insurance commissionerâs office and file a complaint, if necessary.
