                                NOT FOR PUBLICATION                        FILED
                        UNITED STATES COURT OF APPEALS                     AUG 22 2017
                                                                        MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS
                                FOR THE NINTH CIRCUIT


 UNITED STATES OF AMERICA,                           No. 16-30100

            Plaintiff - Appellee,                    D.C. No. 3:14-cr-00059-RRB-1

   v.
                                                     MEMORANDUM*
 PAUL STOCKLER,

            Defendant - Appellant.

                        Appeal from the United States District Court
                                 for the District of Alaska
                        Ralph R. Beistline, District Judge, Presiding

                                Submitted August 15, 2017**
                                    Anchorage, Alaska

Before: GRABER, CLIFTON, and M. SMITH, Circuit Judges.

        Petitioner Paul Stockler pleaded guilty to willfully failing to file federal

income tax returns for tax years 2006, 2008, and 2009. Under the United States

Sentencing Guidelines, the sentencing range for this offense turns in part on the


        *
        This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
      **
         The panel unanimously concludes that this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
amount of the tax loss attributable to Stockler’s conduct. See U.S.S.G. § 2T1.1(a).

Following Stockler’s guilty plea, the district court held an evidentiary hearing to

determine the relevant tax loss amount. Stockler argued at the hearing that he was

entitled to retroactively seek mark-to-market treatment under 26 U.S.C. § 475(f),

such that his trading losses could be treated as ordinary losses as opposed to capital

losses and would therefore not be subject to the $3,000 deduction cap contained in

26 U.S.C. § 1211(b). The district court found that Stockler was not entitled to

retroactive mark-to-market election and calculated his loss amount accordingly.

Stockler now appeals the sentence imposed upon him by the district court, arguing

that he was entitled to mark-to-market treatment for the purpose of determining the

tax loss amount. We hold that the district court did not clearly err in finding that

Stockler failed to qualify for mark-to-market treatment. We therefore affirm.

      We review the district court’s factual findings for clear error. United States

v. Garcia, 497 F.3d 964, 969 (9th Cir. 2007).

      To qualify for mark-to-market election, a taxpayer must be in the business of

trading securities. See 26 U.S.C. § 475(f)(1)(A). In Purvis v. Commissioner, 530

F.2d 1332 (9th Cir. 1976) (per curiam), we summarized the relevant considerations

for finding that a taxpayer constitutes a trader of securities as whether “securities are

bought and sold with reasonable frequency in an endeavor to catch the swings in the

daily market movements and profit thereby on a short term basis.” Id. at 1334

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(quoting Chiang Hsiao Liang v. Comm’r, 23 T.C. 1040, 1043 (1955)). Internal

Revenue Service (IRS) Publication 550 takes a similar approach, stating that, “[t]o

be engaged in business as a trader in securities,” a taxpayer (1) “must seek to profit

from daily market movements in the prices of securities,” (2) his “activity must be

substantial,” and (3) he “must carry on the activity with continuity and regularity.”

I.R.S. Pub. 550 (2005).

      The district court applied the framework set forth in IRS Publication 550 and

found, based on evidence presented at the hearing, that Stockler “did not have a

business license for [his trading] activity; he did not file a schedule C for a trading

business; he held the securities for relatively longer periods of time as compared to

professional day traders; he did not produce any income from day trading to provide

for a livelihood; he devoted the majority of his time to his law practice and not to

day trading; and he held himself out as a lawyer, not a day trader.” We considered

some of these same factors in Purvis to uphold a finding that the taxpayer was not

in the business of trading: The taxpayer in that case held himself out as an attorney,

failed to file a schedule C with respect to any business of trading, and did not

maintain separate bank accounts to assist his trading activities. 530 F.2d at 1334.

      Evidence at the hearing additionally showed that in 2005, Stockler traded on

only approximately 59% of the open market days. Revenue Agent Peter Orth

testified that professional traders ordinarily trade on a greater percentage of market

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days.    Furthermore, while the district court found that Stockler’s trading was

continuous in 2005, it found that his trading was not continuous in 2006: During that

year, Stockler had a period of four-and-a-half months during which he did not

engage in any day trading. Finally, Stockler expressly stated at the hearing that he

did not consider himself to have a trading business.

        In light of the evidence in the record, the district court did not clearly err in

finding that Stockler was not in the business of trading securities. Because Stockler

was not in the business of trading securities, he was not eligible for mark-to-market

treatment under § 475(f). We therefore decline to reach the question whether, had

Stockler qualified for mark-to-market treatment, his election of such treatment

would have been timely.

        AFFIRMED.




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