T11-Chp-00-5-Capital Loss vs. Ordinary Loss Journal of Accountancy

T11-Chp-00-5-Capital Loss vs. Ordinary Loss Journal of Accountancy

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Unformatted text preview: 2af86cb29e90b66849df5e5d8ca2c245dd3e3641.doc TAX BRIEF INDIVIDUAL Capital Loss vs. Ordinary Loss – Journal of Accountancy - February 1999. W hen taxpayers realize losses, they generally prefer to classify them as ordinary business losses rather than capital losses. In the case of the financial misadventures of Richard L. Matz, this was not to be. Matz claimed ordinary business losses and interest deductions totaling over $4 million for failed start-up companies and real estate ventures. The IRS denied the business deductions and determined instead that he underpaid his taxes by approximately $900,000 ( Richard L. Matz, et ux. v. Commissioner , TC Memo 1998-334). Matz was primarily a real estate broker, but he also invested in real estate, from which he reported losses of several million dollars. He had bought and sold 45 real estate properties over a period of three decades. Matz claimed that he was in the business of acquiring, developing and selling real estate for profit and that he held the real estate for sale to customers in the ordinary...
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