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165(d).9 Wagering losses under section 165(d) are excluded from
the definition of miscellaneous itemized deductions for purposes
of the 2-percent floor on miscellaneous itemized deductions
prescribed by section 67. Sec. 67(b)(3); cf. sec. 68, and see
n.4.
The Commissioner's determinations in a notice of deficiency
are presumed to be correct, and the taxpayer bears the burden of
proving that those determinations are erroneous. Rule 142(a);
Welch v. Helvering, 290 U.S. 111, 115 (1933). Moreover, because
deductions are a matter of legislative grace, the taxpayer must
show that he or she comes squarely within the terms of the
statute granting such deduction. New Colonial Ice Co. v.
Helvering, 292 U.S. 435, 440 (1934); Nelson v. Commissioner, 30
T.C. 1151, 1154 (1958).
The parties have devoted a substantial amount of time and
effort debating the issue of whether a contestant's appearance on
the "Wheel of Fortune" game show constitutes a wagering
transaction governed by the provisions of section 165(d). In our
opinion it does not.10 However, we need not definitively decide
9 Sec. 165(d) provides as follows:
(d) Wagering Losses.--Losses from wagering
transactions shall be allowed only to the extent of the
gains from such transactions.
10 In this regard we observe that the release form executed
by each contestant on "Wheel of Fortune" expressly provides that
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