6
issued a refund for the full amount requested on the return by
the IRS; (2) they should not be held liable for the deficiency
because they gave full disclosure of their position on the Form
8275 attached to their return; and (3) the application of section
165(d) violates their right to equal protection in that it treats
professional gamblers differently than taxpayers in other trades
or businesses.
In response to petitioners' first argument, the fact that
petitioners received a tax refund does not preclude respondent
from later determining a deficiency in petitioners' taxes for the
same taxable year. Gordon v. United States, 757 F.2d 1157, 1160
(11th Cir. 1985); Warner v. Commissioner, 526 F.2d 1 (9th Cir.
1975), affg. T.C. Memo. 1974-243; Hacker v. Commissioner, T.C.
Memo. 1993-285, affd. without published opinion 29 F.3d 632 (9th
Cir. 1994). In the same vein, the disclosure of a position by a
taxpayer does not prevent respondent from later determining that
the position is in error. The purpose of Form 8275 is to shield
taxpayers from an addition to tax for negligence or substantial
understatement of income tax. See secs. 6653, 6661(b). In
response to petitioners' final argument, we quote our decision in
Valenti v. Commissioner, supra: "The argument that section
165(d) violates equal protection as applied to those engaged in
the trade or business of gambling borders on the frivolous. We
reject it without further discussion."
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