                         T.C. Memo. 2011-66



                      UNITED STATES TAX COURT



                  ROBERT KOBELL, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 20476-08.             Filed March 17, 2011.



     Robert Kobell, pro se.

     Tracey Leibowitz, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     FOLEY, Judge:   After concessions, the issue for decision is

whether petitioner is entitled to a deduction for a contribution

to an individual retirement account (IRA) relating to 2005.

                         FINDINGS OF FACT

     Early in his career, petitioner worked in New York City and

obtained extensive experience in hedging transactions, options,
                                   - 2 -

and financial derivatives.       Petitioner participated in the

financial markets by trading stocks and derivatives, at times

with partners.

       In 2005, petitioner, at age 68, contributed $4,500 to his

IRA.       In addition, he held corporate bonds and engaged in three

stock transactions.       On his 2005 Federal income tax return (2005

return), petitioner claimed a $4,500 IRA contribution deduction;

listed “investor/trader” as his occupation; and reported $71,523

of corporate bond interest, $915 of dividends, and $4,908 of

Social Security benefits.       Petitioner reported the dividends on

Schedule B, Interest and Ordinary Dividends, of his 2005 return

but did not include the dividends in his gross income.

           On June 9, 2008, respondent issued petitioner a notice of

deficiency in which respondent determined that petitioner was not

entitled to the $4,500 IRA contribution deduction and that

petitioner failed to include in gross income $915 of dividends.

On August 19, 2008, while residing in Florida, petitioner filed

his petition with the Court.       On October 14, 2008, petitioner

filed an amended petition.

                                  OPINION

       Generally, a taxpayer is entitled to deduct an amount

contributed to an IRA.       Sec. 219(a).1   The deduction, however,


       1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue, and
                                                   (continued...)
                                - 3 -

shall not exceed the lesser of the deductible amount or an amount

equal to the taxpayer’s compensation includable in gross income.

Sec. 219(b)(1), (5).    Compensation includes earned income, which

is defined as the net earnings from self-employment.    Secs.

219(f)(1), 401(c)(2).    Compensation does not include dividends

and interest unless the taxpayer is a dealer in stocks or

securities and the dividends and interest are received in the

course of a trade or business as a dealer.    Sec. 1402(a)(2).

     Petitioner’s 2005 income comprised Social Security benefits,

dividends, and interest.    Social Security benefits are not

compensation.    Secs. 86(f)(3), 219(f)(1).   Dividends and interest

are compensation only if the taxpayer is a dealer.    See sec.

1402(a)(2).    Petitioner held corporate bonds which produced

interest, but the bonds were not held for sale to customers.2

Moreover, he engaged in only three stock transactions, did not

have any customers, and did not operate from an established place

of business.    See Miller v. Commissioner, 77 T.C. 97, 101-103

(1981); Kemon v. Commissioner, 16 T.C. 1026, 1032 (1951); sec.


     1
      (...continued)
all Rule references are to the Tax Court Rules of Practice and
Procedure.
     2
      Pursuant to sec. 7491(a), petitioner has the burden of
proof unless he introduces credible evidence relating to the
issue that would shift the burden to respondent. See Rule
142(a). Our conclusions, however, are based on a preponderance
of the evidence, and thus the allocation of the burden of proof
is immaterial. See Martin Ice Cream Co. v. Commissioner, 110
T.C. 189, 210 n.16 (1998).
                                 - 4 -

1.1402(a)-5(d), Income Tax Regs.    In short, petitioner was not a

dealer, had no compensation, and is not entitled to a deduction

for his IRA contribution.   Accordingly, we sustain respondent’s

determinations.

     Contentions we have not addressed are irrelevant, moot, or

meritless.

     To reflect the foregoing,


                                           Decision will be entered

                                      under Rule 155.
