Eldron U. Erbs - Page 8




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          substantial, was more consistent with a hobby than a trade or               
          business.  He argues that he spent a significant amount of time             
          studying “cycles” of video poker machines, reading publications             
          relating to video poker, and practicing on his own video poker              
          machine in order to “achieve greater success while gambling.”               
          These efforts would be consistent with a desire to win money.               
          However, the desire to win money is consistent with gambling                
          purely for its entertainment or recreational aspects, and we find           
          that petitioner gambled primarily for this reason rather than               
          primarily for profit.                                                       
               Finally, we note that petitioner is semiretired and in 1996            
          received a substantial amount of income:  Excluding his business            
          loss of $3,415, he received over $40,000 in interest, individual            
          retirement account distributions, and Social Security benefits.             
          This income and petitioner’s semiretired status indicate that he            
          was not relying upon gambling for his livelihood.                           
               In his trial briefs, petitioner discusses the material                 
          participation requirements of section 469 and the regulations               
          thereunder.  First, petitioner points to the references in these            
          provisions to 500 hours of participation in an activity, arguing            
          that he was in the trade or business of gambling because he                 
          devoted nearly twice that amount of time.  See, e.g., sec. 1.469-           
          5T(a)(1), Temporary Income Tax Regs., 53 Fed. Reg. 5725 (Feb. 25,           
          1988).  These provisions govern whether a trade or business is              







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