Stanley B. and Rose M. Whitten - Page 9

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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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