Tax Court Denies Lawyer/Day Trader's Request for Attorneys' Fees from IRS

L.S. Vines, a personal injury lawyer in Birmingham, Alabama, settled a big class action case and reported income of $18.5 million in 1999 and $17.0 million in 2000.  He then decided to become a day trader, and by April 2000 had lost $25.2 million trading securities.

After filing for an extension of time for filing his 2000 tax return, Vines learned of the possibility of deducting his securities trading losses as ordinary losses through a section 475(f) mark-to-market election.  Although Vines had missed the due date for filing the election as established by Rev. Proc. 99-17, he sought section 9100 relief to obtain an extension of time to file the election.  Vines hired Caplin & Drysdale to prepare and file the section 475(f) election and request for section 9100 relief.

Although the IRS denied Vines' Section 9100 relief request in Priv. Ltr. Rul. 200209053, The Tax Court granted the relief.  Vines v. Commissioner, 126 T.C. 279 (2006).  Yesterday, the Tax Court denied Vines' request for $425,000 in attorneys' fees.  Vines v. Commissioner, T.C. Memo. 2006-258 (11/30/06).