Ralph E. Holmes appealed a decision from Tax Court that considered the deficiencies and penalties associated with his tax returns from 2000 to 2004. The court below held, under section 1045, that an individual could not defer recognition of gain on the sale of stock. The Ninth Circuit found no clear error in finding that Holmes failed to establish he had acquired shares of the stock at issue. The court also found no clear error in the insufficient nature of Holmes’ testimony for showing that at least 80% of stock “assets were used in the active conduct of qualified trades or businesses.” In the end, the Ninth Circuit affirmed the Tax Court’s holding that an individual cannot defer recognition of gain.

See Ralph E. Holmes v. Commissioner of Internal Revenue, Tax Ct. No. 3769-10, ( 9th Cir. Feb. 13, 2015).

Posted by Aryane Garansi, Associate Editor, Wealth Strategies Journal