NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff - Appellee,

 v.

PAUL STOCKLER, 

Defendant - Appellant.

No. 16-30100

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

MEMORANDUM*

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).

FILED

AUG 22 2017

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS
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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.