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either nondeductible personal expenses under section 2627 or
miscellaneous itemized deductions that may only be deducted
subject to the 2-percent floor prescribed by section 67(a).
Either theory would provide a sound basis for sustaining
respondent's deficiency determination.8
In contrast, petitioners contend that the expenses in issue
represent petitioner's wager or bet that he would win cash or
other valuable prizes on the "Wheel of Fortune" game show. As
such, petitioners maintain that the prizes that petitioner
actually won are wagering winnings and that the expenses incurred
are properly characterized as wagering losses under section
7 Sec. 262(a) provides the general rule that no deduction
shall be allowed for personal, living, or family expenses. Sec.
1.262-1(b)(5), Income Tax Regs., provides in pertinent part:
Expenses incurred in traveling away from home (which
include transportation expenses, meals, and lodging)
and any other transportation expenses are not
deductible unless they qualify as expenses deductible
under section 162 * * * (relating to trade or business
expenses), section 170 * * * (relating to charitable
contributions), section 212 * * * (relating to expenses
for production of income), section 213(e) * * *
(relating to medical expenses), or section 217(a) * * *
(relating to moving expenses). * * *
8 Respondent's determination will be sustained even if we
conclude that the expenses in question are properly characterized
as miscellaneous itemized deductions because these expenses do
not exceed 2 percent of petitioners' adjusted gross income and,
therefore, would provide no tax benefit to petitioners. See sec.
67.
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