- 12 -
Rept. 558, 73d Cong., 2d Sess. (1934), 1939-1 C.B. (Part 2) 586,
605.
It is within this relative vacuum of authority that
petitioners rely on Kozma v. Commissioner, T.C. Memo. 1986-177,
as support for their position that the expenses disputed herein
constitute wagering losses under section 165(d). As explained
below, petitioners' reliance on Kozma v. Commissioner is
misplaced.
In Kozma v. Commissioner, supra, the taxpayer, an individual
engaged in the trade or business of gambling, enjoyed gross
gambling winnings (gross receipts) of $9,750 and $15,191 for 1980
and 1981, respectively. However, after combining the amounts
that he paid for wagering tickets with business expenses for
transportation, depreciation, meals and lodging, admission fees,
and office supplies, the taxpayer reported net losses in respect
of his gambling business for both 1980 and 1981.12 The
Commissioner issued a notice of deficiency disallowing the losses
claimed by the taxpayer on the ground that gambling losses are
12 The taxpayer paid $9,506 and $14,085 for wagering
tickets in 1980 and 1981, respectively, leaving him with a gross
profit from gambling of $244 and $1,106 for 1980 and 1981,
respectively. In addition, the taxpayer incurred business
expenses for transportation, depreciation, meals and lodging,
admission fees, and office supplies in the amounts of $3,468 and
$8,148 for 1980 and 1981, respectively. After subtracting both
the cost of his wagering tickets and his business expenses, the
taxpayer reported a net loss from gambling in the amount of
$3,244 and $7,042 for 1980 and 1981, respectively.
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