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We treat these numbers as the approximate number of times
petitioner visited the casino in each month. He would normally
visit the casino during late evening and early morning hours,
averaging 9 hours per visit.
Petitioner received six Forms 1099 in 1996 for gambling
winnings. On his 1996 Federal income tax return, he reported the
amounts indicated on the Forms 1099 as his only winnings from
gambling. He reported this income of $10,538 on Schedule C,
Profit or Loss From Business, claiming no cost of goods sold or
expenses other than gambling losses of $10,538, resulting in zero
net profit. Petitioner reported $27,865 in adjusted gross
income, consisting of the following:
IRA distributions $26,600
Social Security benefits 3,052
Interest 1,628
Business loss (antique sales) (3,415)
Adjusted gross income 27,865
In addition, petitioner received $9,530 in nontaxable net Social
Security benefits. The occupation stated on his return was
“retailer”.
Respondent determined that petitioner’s gambling activity
was not an activity entered into for profit. Accordingly,
respondent recharacterized petitioner’s gambling income and
determined that petitioner’s gambling losses were deductible as
an itemized deduction rather than as a trade or business expense.
Respondent also determined that petitioner was entitled to
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