Sheila extensively buys and sells securities. The IRS has determined upon examination that she is not in a trade or business concerning the securities' transactions and therefore, Shelia must be
A)a broker.
B)an active trader.
C)an active investor.
D)a securities' dealer.

Question

Quizplus · Accepted Answer

Since it has been determined that Sheila is not in a trade or business concerning securities transactions, she cannot be a broker or a securities dealer. Being an active trader implies that she is engaged in frequent and substantial buying and selling of securities as a primary source of income, which is not the case here. Therefore, the best choice is that Sheila is an active investor, who regularly buys and sells securities but does not do so as a trade or business.

Sheila Extensively Buys and Sells Securities