Tax Legal Services · Primary-source case analysis

Higgins: Managing One’s Own Investment Portfolio Was Not a Trade or Business

By Aneeta Mishra and Timothy Chan

Published September 5, 2026

Decision: Higgins v. Comm’r, 312 U.S. 212 (1941).

Higgins v. Commissioner concerned a taxpayer who maintained offices and employees to collect income, keep records, and supervise extensive domestic and foreign securities and real-estate holdings.

Volume and continuity did not settle the classification

The portfolio demanded substantial, regular attention, but the Court found no established rule treating management of one’s own securities as a trade or business.

Personal investing remained distinct from business operations

The taxpayer did not hold himself out as a dealer or provide investment services to others. His activities conserved and monitored his own property.

Real-estate activity could be separated

Expenses attributable to the taxpayer’s real-estate business could be segregated from the nondeductible securities-management expenses.

The deficiency determination was affirmed

The Court upheld denial of the securities-related deductions while allowing allocation to the separate real-estate business.

Key takeaways

• Classify each activity separately.
• Distinguish investing for oneself from dealing or serving others.
• Allocate shared staff and office costs with records.
• Apply current deduction provisions to the taxpayer’s actual role.