Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

M. BERNARD MORGAN v. COMMONWEALTH PENNSYLVANIA (05/11/79)

decided: May 11, 1979.

M. BERNARD MORGAN, PETITIONER
v.
COMMONWEALTH OF PENNSYLVANIA, RESPONDENT



Appeal from the Order of the Board of Finance and Revenue in case of Appeal of M. Bernard Morgan, Docket No. CPIT-575, dated January 11, 1977.

COUNSEL

M. Bernard Morgan, petitioner, for himself.

R. Scott Shearer, Deputy Attorney General, for respondent.

President Judge Bowman and Judges Crumlish, Jr., Mencer, Rogers, Blatt, DiSalle and Craig. Judges Wilkinson, Jr. and MacPhail did not participate. Opinion by President Judge Bowman. Judge Crumlish, Jr. concurs in the result only.

Author: Bowman

[ 42 Pa. Commw. Page 558]

This is a personal income tax appeal from a decision of the Board of Finance and Revenue (Board). The principal issue before us is whether the buying and selling of stocks and bonds by an individual for his personal pecuniary benefit constitutes "operation of a business, profession, or other activity" within the meaning of Section 303(a)(2) of the Tax Reform Code of 1971 (Code),*fn1 72 P.S. ยง 7303(a)(2). The facts of this case have been stipulated.

Prior to his retirement in November, 1969 at age 65, petitioner was employed by the FMC, Corp. as Chief Engineer-Fiber Operations. Not uncharacteristically, petitioner's retirement did not signal the extinguishment of his pecuniary pursuits for, acting as an individual, he buys, holds and sells securities with the explicit intent of making profits for his personal purposes. Petitioner does not have a license from state or federal securities commissions to engage in

[ 42 Pa. Commw. Page 559]

    the purchase or sale of securities for the accounts of others, nor has he been so engaged. Petitioner has not acted in the capacity of an investment advisor, nor has he represented himself as such. Petitioner's activity can perhaps best be described as personal money management for profit.

On his Pennsylvania personal income tax return for calendar year 1972, petitioner entered $2320 on line 1 as "Compensation"; $0 on line 2 as "Net Profits from Business, Professional or Farm"; $8422 on line 3 as "Dividends"; $3827 on line 4 as "Interest"; $12,249 on line 5 (Total of lines 3 and 4); $264 on line 6 as "Sale or Exchange of Property"; and that same figure, $264, on line 10 (Total of lines 6, 7, 8 and 9). Then, on line 11, which is "Pennsylvania Taxable Income" produced by addition of lines 1, 2, 5 and 10, petitioner, rather than entering the sum of $14,833, entered the figure $13,312, and made the following notations: "14833-1521 * REDUCED BY $1521 COST OF 'OTHER ACTIVITY' TO PRODUCE TAXABLE INCOME. SEE SCH. C."

On Schedule C, entitled "Profit (or Loss) from Business or Profession," petitioner entered the figure $1520.76 on line 24, "Other business expenses," and noted: "THIS COST HAS BEEN USED TO ARRIVE AT ' NET PROFITS . . . IN ACCORDANCE WITH ACCEPTED ACCOUNTING PRINCIPLES AND PRACTICES'. I CAN FIND NO OTHER PLACE TO SHOW IT."*fn2 (Emphasis in original.)

[ 42 Pa. Commw. Page 560]

On Schedule C-1, "Explanation of Lines 6, 12, 14, and 24," petitioner lists $1155.30 and $278.46 as having been paid to "NML Ins. Co." and "Reynolds Securities," respectively, and $12, $70 and $5 as expended for a safe deposit box, business publications and sundry supplies, respectively. Petitioner offers the following explanation therefor: "INTEREST PAID FOR FUNDS ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.