Pansy V. Panages - Page 4
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and then resold the flowers to retail florists. The flower shop
is one of F.B. Wholesale’s customers. F.B. Wholesale paid
petitioner a $7,200 salary during 2001. Finally, petitioner
earned $26,160 in rent from two other businesses and $4,848 in
the lease of a portion of her home to an elderly lady.
During the year in issue, petitioner was nearly 70 years of
age and had begun making plans for retirement. As a result, she
began training her two daughters to assume control of the flower
shop; however, petitioner was still actively involved in the
flower shop during 2001. Because petitioner planned to hand over
management of the flower shop to her daughters, when she turned
65, she began looking for other ways to supplement her monthly
Social Security benefits.
Petitioner believed she had a talent for winning at slot
machines and began playing the machines at different locations.
She eventually gambled almost exclusively at one grocery store
(Smith's) that had the type of machines she liked, known as
progressive machines. She began cultivating relationships with
some of the grocery employees and started “tipping” them so they
would alert her to what machines had not “paid out” recently.
Petitioner usually played the machine or machines that had gone
the longest without a winner. On her 2001 tax return, she
deducted as business expenses $6,000 in tips she paid grocery
employees for that information. Petitioner estimated she spent
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