- 4 - itemized deductions in lieu of the claimed standard deduction and allowed petitioner an additional itemized deduction for the payment of taxes. Finally, a computational adjustment was made to the amount of taxable Social Security benefits. Petitioner disputes respondent’s determination that he was not engaged in the trade or business of gambling. Ordinary and necessary expenses paid in carrying on a trade or business generally are deductible under section 162(a). A taxpayer who is engaged in the trade or business of gambling may deduct gambling losses and expenses, if otherwise permitted, only to the extent of the taxpayer’s gambling winnings. See secs. 162(a) and 165(d); Valenti v. Commissioner, T.C. Memo. 1994-483. A taxpayer who is not engaged in the trade or business of gambling also may deduct such losses and expenses to the extent of their winnings, but must do so under section 165(a). A deduction under section 165(a) reduces a taxpayer’s taxable income only if the taxpayer elects to forgo the standard deduction. See sec. 63. Resolving the question whether a taxpayer is engaged in a trade or business “requires an examination of the facts in each case.” Commissioner v. Groetzinger, 480 U.S. 23, 36 (1987) (quoting Higgins v. Commissioner, 312 U.S. 212, 217 (1941)). The Supreme Court in Commissioner v. Groetzinger, supra, addressingPage: Previous 1 2 3 4 5 6 7 8 9 Next
Last modified: May 25, 2011