Bernard F. Kochevar, Sr. and Marlene C. Kochevar - Page 3

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               Petitioners began playing progressive slot machines on a               
          frequent basis in 1989.  Petitioners testified that they traveled           
          to local casinos in the evenings after work and on weekends,                
          spending 20 to 40 hours each week studying and playing slot                 
          machines.  They spent the majority of their time at the Sparks              
          Nugget and Western Village casinos in Sparks, Nevada, and the               
          Peppermill Casino in Reno.                                                  
               On or about April 15, 1991, petitioners filed a Form 4868              
          requesting an automatic 4-month extension of time to file their             
          1990 joint Federal income tax return and paying their estimated             
          1990 net tax liability of $1,813.  Petitioners' request was                 
          granted, and, on August 15, 1991, the final day of the extension,           
          they postmarked their 1990 return, wherein they requested a                 
          refund of $6,461.  This amount was calculated as follows: total             
          tax due of $7,199, less Federal income tax withheld of $11,847              
          and $1,813 paid with Form 4868.  Petitioners received their                 
          refund of $6,461 in a check dated September 20, 1991, issued by             
          the U.S. Treasury.                                                          
               On the Schedule C attached to their 1990 Federal income tax            
          return, petitioners stated that they were engaged in the business           
          of being professional slot machine players.  They reported income           
          and expenses from gambling activities in the respective amounts             
          of $24,777 and $47,853, resulting in a net loss of $23,076.  The            
          expenses claimed in connection with their gambling were as                  
          follows:  (1) Automatic teller machine (ATM) charges and tips in            




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