John D. Smith and Hazel B. Smith - Page 3

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          December 1994.  The benefits took the form of monthly payments,             
          the amounts of which took into account his wages at the time of             
          the accident, worker's compensation payments and other disability           
          benefits received.  During 1994 he received monthly payments                
          (long-term disability benefits) from Hartford totaling $3,637.              
          The monthly payments were made by check; the check stubs indicate           
          that the "taxable pct" of each payment is "100".  The payments              
          were reported as wages on a Form W-2 issued to him by                       
          Consolidated for the year 1994.                                             
               Neither petitioner was employed during 1994.  Because they             
          had so much free time and their activities were somewhat limited            
          by their respective disabilities, they developed an interest in             
          playing bingo.  Many of their friends also played bingo and                 
          petitioners viewed the experience as a social activity as much as           
          a gambling activity.                                                        
               During 1994 petitioners attended numerous bingo sessions               
          conducted at two Indian reservations located within 20 miles of             
          their residence.  Typically, they would attend one or two bingo             
          sessions per day, 4 to 5 days per week.  Mrs. Smith spent between           
          $27 and $32 per session on various types of games that were                 
          played during the bingo sessions.  Mr. Smith spent somewhat less.           
          Sometimes they won, sometimes they lost, and sometimes they broke           
          even.  Petitioners did not consider breaking even to equate to              
          winning.  Petitioners did not maintain any records that reflect             





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