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Kozma v. Commissioner can be distinguished on its facts from the
present case.
Nor are we persuaded that the legal holding in Kozma v.
Commissioner, supra, is controlling in the present case. Rather,
Kozma v. Commissioner stands for the narrow proposition that, in
the case of a professional gambler, the limitation imposed under
section 165(d) limiting wagering losses to wagering winnings
overrides the deduction otherwise allowable under section 162(a)
for ordinary and necessary business expenses. See Valenti v.
Commissioner, T.C. Memo. 1994-483. Petitioners apparently
believe that Kozma v. Commissioner, supra, together with the
cases cited therein, stand for the proposition that all expenses
related to a wagering activity are properly characterized as
wagering losses under section 165(d). However, we do not glean
from those cases any intention to eliminate the distinction
between wagering losses, i.e., the amount of wagers or bets lost
on wagering transactions, and expenses related thereto, e.g.,
expenses for transportation, meals, and lodging incurred to
engage in wagering transactions. See Boyd v. United States, 762
F.2d 1369, 1372-1373 (9th Cir. 1985).
Consistent with the foregoing, we conclude that wagering
losses must be accounted for and reported separately from the
expenses incurred by the taxpayer in order to engage in the
underlying wagering transaction. In applying this rule to the
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