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Respondent determined a deficiency of $532 in petitioners'
1996 Federal income tax. Respondent conceded that petitioners
did not fail to include original issue discount of $20.75 in
their income. The sole issue for decision is whether petitioners
failed to report as income gambling winnings of $3,500.
Some of the facts in this case have been stipulated and are
so found. Petitioners resided in Wilmington, Illinois, at the
time they filed their petition.
In 1996, petitioners, who are not professional gamblers,
gambled at the Empress Casino Joliet, the Empress Casino Hammond,
and Harrah's Joliet Casino. Petitioner Mary Carver won $2,000 on
one occasion, and petitioner Eddie Carver won $1,500 on one
occasion. These amounts were reported to the Internal Revenue
Service. We accept petitioner Mary Carver’s testimony that their
gambling losses exceeded their gambling winnings. Petitioners
did not report the gambling winnings or losses on their 1996 tax
return. They did not itemize their deductions, and instead
claimed the standard deduction.
Petitioners contend that the gambling winnings should not be
included in their income because they had losses that exceeded
their winnings. Respondent contends that the winnings must be
included in petitioners' income.
Gross income includes all income from whatever source
derived, including gambling winnings. Sec. 61(a); Commissioner
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