- 7 -
Otherwise, there would be no way of knowing whether the sum of
the losses deducted on the return is greater or less than the
taxpayer's winnings. Schooler v. Commissioner, supra at 869.
For example, if the taxpayer, in addition to the winnings
reported on a return, had other winnings that were not reported,
then the taxpayer must prove that the losses claimed as a
deduction on the return exceeded the unreported winnings in order
to be entitled to deduct any such losses. Donovan v.
Commissioner, supra. The amount deductible in such situation is
the amount of the claimed losses which exceeds the unreported
winnings, as long as such amount does not exceed the winnings
reported on the taxpayer's return. Sec. 165(d); Schooler v.
Commissioner, supra; Donovan v. Commissioner, supra. Here,
petitioners did not prove the amount of their gambling winnings,
both reported and unreported, and, thus, they failed to prove
that the amount of the wagering losses deducted on the 1999
return is greater than the unreported gains from gambling.
Rodriguez v. Commissioner, T.C. Memo. 2001-36. Respondent,
therefore, is sustained in the disallowance of petitioners'
$4,000 gambling loss deduction for 1999.
The second issue is whether petitioners are liable for the
section 6662(a) penalties. Petitioners contend they should be
absolved of liability for such penalties because they relied on
the representations of their return preparer, Mr. Beltran.
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