Tax Guru – Ker$tetter Letter

I’ve written before about groups such as 165 Services, that supposedly allow investors to deduct the full amounts of their stock market losses as being caused by thefts by their stockbrokers, rather than being limited to the insanely unfair $3,000 per year Schedule D capital loss deduction. I’ve never endorsed this idea because, as I’ve described on several occasions, I consider most stock losses to be the result of stupidity, which as far as I know doesn’t make it any more deductible.

Roth & Company has a funny look at an investor who tried a similar attempt to fully deduct his stock losses with the claim that his broker took advantage of him by forcing him to consume alcoholic beverages and then agree to ridiculous investment decisions. His claim was disallowed by the Tax Court.

However, this is one more bit of substantiation of my claim that playing the stock market is no different than gambling in a casino. Casinos routinely provide free alcoholic beverages for the express purpose of encouraging stupid bets by their customers. Why shouldn’t stockbrokers do the same thing?