- 11 -
this because such issue begs the question regarding the proper
characterization of the expenses incurred by petitioner in
attending and participating in the "Wheel of Fortune" game show.
Consequently, we will focus our attention on the more pertinent
issue of whether the expenses in dispute can be characterized as
wagering losses within the meaning of section 165(d).
Section 165(d) was originally codified as section 23(g) of
the Revenue Act of 1934, ch. 277, tit. I, 48 Stat. 680, 689.11
Notwithstanding the long history of the section, the term
"wagering losses" is not defined in either the Internal Revenue
Code or the regulations. Nor is the term defined in the
legislative history underlying section 165(d). See H. Rept. 704,
73d Cong., 2d Sess. (1934), 1939-1 C.B. (Part 2) 554, 570; S.
10(...continued)
the contestant may not pay or agree to pay money or valuable
consideration in connection with his or her appearance on the
program. In other words, no bet or wager between "Wheel of
Fortune" and the contestant is permitted. Moreover, if
petitioner's contention was correct and if a contestant's
appearance on "Wheel of Fortune" constituted a wagering
transaction governed by the provisions of sec. 165(d), then so
would any other activity where there was an element of risk, such
as investing in the stock market or traveling cross-country for a
job interview. See Jasinski v. Commissioner, T.C. Memo. 1978-1
(investing in capital assets is not a wagering transaction within
the meaning of sec. 165(d)).
11 Sec. 23(g) of the Revenue Act of 1934 was subsequently
redesignated as sec. 23(h) by the Revenue Act of 1938, ch. 289,
52 Stat. 447, 461, and continued as such in the 1939 Code until
enacted as sec. 165(d) in the 1954 Code.
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