Moller v. United States
United States Court of Appeals for the Federal Circuit
721 F.2d 810 (1983)
Joseph and Dorothy Moller (plaintiffs) were full-time investors whose portfolio returns made up nearly all their income, working over 40 hours a week each from home offices in two separate residences to manage investments worth roughly $13.5 to $14.5 million. Ninety-eight percent of their investment returns came from interest and dividends rather than short-term trading gains, reflecting a long-term investment strategy. They claimed home-office tax deductions for 1976 and 1977, which the tax commissioner denied; the Court of Claims ruled for the Mollers, distinguishing between passive and 'active' investors, and the government appealed.
Whether investing, even when conducted actively, extensively, and continuously, constitutes a trade or business for federal tax purposes such that home-office expenses may be deducted.