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V. Gambling Losses
FINDINGS OF FACT
Petitioner gambled every day from April until he left Las
Vegas in late July 1995. Petitioners claimed "gaming wins" of
$1,200 and gambling expenses and losses of $35,034 on their 1995
Federal income tax return. Respondent disallowed petitioners'
gambling expenses and losses in excess of gambling winnings.
OPINION
Petitioners maintain that, pursuant to section 162(a), the
net wagering losses represented a deductible trade or business
expense. Respondent contends that the deduction of net wagering
losses is precluded by section 165(d). We agree with respondent.
Section 165(d) provides that "Losses from wagering transactions
shall be allowed only to the extent of the gains from such
transactions." In other words, a taxpayer is not entitled, as a
matter of law, to deduct a net gambling loss.
Petitioner relies on Commissioner v. Groetzinger, 480 U.S.
23 (1987), for the proposition that net gambling losses are
properly deductible in full as trade or business expenses under
section 162(a). Petitioners' discussion of Groetzinger ignores
the fact that the section 165(d) restriction was not at issue in
Groetzinger. The issue in Groetzinger was whether a full-time
gambler, who made wagers solely on his own account, was engaged
in a trade or business under section 162 for purposes of treating
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