Bielfeldt v. Commissioner
United States Court of Appeals for the Seventh Circuit
231 F.3d 1035 (2000)
Bielfeldt (plaintiff) speculated in Treasury securities, buying and selling with primary dealers only during short windows a few weeks a year and sometimes holding no securities at all for months at a time. After suffering roughly $85 million in losses, he sought to deduct them as ordinary losses, which would let him avoid the $3,000 annual limit on capital-loss deductions, by claiming he was a securities "dealer." The Tax Court ruled against him, and he appealed to the Seventh Circuit.
Whether, under federal tax law, assets held as inventory for sale to customers are excluded from capital-asset treatment, and whether a speculative trader like Bielfeldt qualifies for that treatment.