Normally,a security dealer reports ordinary income on the sale of securities unless it is specifically identified as a security being held for investment.

Question

Quizplus · Accepted Answer

This is true. Securities held for investment purposes may be reported as capital gains instead of ordinary income. However, if the security dealer regularly buys and sells securities as part of their business, those securities will likely be considered inventory and thus subject to ordinary income treatment upon sale.

Normally,a Security Dealer Reports Ordinary Income on the Sale of Securities