Snyder v. Commissioner, 295 U.S. 134 (1935)

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Snyder v. Commissioner of Internal Revenue

No. 663

Argued March 15, 1935
Decided April 29, 1935
295 U.S. 134

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE THIRD CIRCUIT

Syllabus

1. Shares traded in on margin are capable of identification for the purposes of the "first-in, first-out" rule of the Treasury (Reg. No. 74, Art. 58) but the mere intention of the trader to sell particular shares, without further designation, does not constitute sufficient identification. Helvering v. Rankin, ante, p. 123. P. 137.

2. A person who devotes no substantial part of his business day to stock transactions, who is not a trader on the exchange making a living in buying and selling securities, but who deals merely with the object of increasing, as far as his margin will permit, his holdings of a particular stock carried for his account by his brokers, is not engaged in market operations as a trade or business within the meaning of § 22 of the Revenue Act of 1928. P. 137.

3. Gain realized from sales of property purchased in previous years, measured, as prescribed by §§ 111-113 of the 1928 Act, by the excess of proceeds of sale over cost, constitute income taxable in the year in which the sales are made. P. 140.

4. Assuming that this rule is applicable only to the sale of capital assets, and not to sales made in the course of a business of trading on the stock exchange, it applies to a taxpayer who has failed to establish that the securities sold were held primarily for sale in the regular course of business. P. 140.

5. The Court rejects the contention in this case that the taxpayer’s income realized during the taxable year from his stock transaction should not be measured by the difference between the sale and cost prices of securities sold, but by the result of all his market operations, purchases as well as sale, during the year -- i.e., by taking the difference between the purchase price and the sales price of shares bought and sold during the year and deducting expenses, such a commissions, taxes, and interest. P. 141.

73 F.2d 5 affirmed.

Certiorari, 294 U.S. 701, to review the affirmance of a decision of the Board of Tax Appeals, 29 B.T.A. 39, which sustained an income tax assessment.