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Although petitioner relied on a commercial service to
prepare his 1993 and 1994 income tax returns, the record does not
establish that petitioner provided complete and correct
information to the preparer. There is no basis, therefore, to
completely absolve petitioner from liability for the accuracy-
related penalty. However, we think that petitioner should not be
liable for the accuracy-related penalty insofar as the
underpayment of tax for 1993 is attributable to the disallowed
deduction for the gambling loss.
A return preparer should know that, as a matter of law,
losses from wagering transactions are allowable only to the
extent of the gains from such transactions. Sec. 165(d).
Petitioner was not aware of this provision, and in view of the
particular facts and circumstances of this case, we do not think
that petitioner could be expected to have been aware of such
provision. Therefore, even though the record does not establish
that petitioner provided complete and correct information to his
return preparer, the deduction claimed for the $5,000 net
gambling loss was the result of the preparer's error.
Accordingly, to this extent, respondent's determination is not
sustained.
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