- 12 -
Consequently, petitioners’ cost of winning the $138,900 total
slot machine winnings was $6,945 ($4,975 plus $1,970).
Subtracting this amount from petitioners’ $144,645 gross gambling
winnings (which includes the $138,900 slot machine winnings), we
conclude that the facts relied upon by respondent show that
petitioners had total unreported gross income from gambling of
$137,700.11
As previously discussed, respondent determined in the notice
of deficiency that petitioners had unreported gambling winnings
of $91,000, of which amount $85,900 represent slot machine
winnings reported on Forms W-2G from the Casinos Magic.
Consistent with our conclusion that these slot machine winnings
reflect payoffs of 20 times the bets placed, it appears that
petitioners’ cost of winning the $85,900 total jackpots was
$4,295. Excluding this capital-recovery cost from the gross
gambling winnings reflected in the notice of deficiency, we
10(...continued)
Jubilation Casino in Lakeshore, Miss., respectively, the record
contains no basis for inferring either the type of games played
or the bets placed.
11 This figure does not include table games winnings
reflected on the Casinos Magic THRs, in amounts of $10,850 for
Ronald and $1,250 for Paula. Nor does this figure otherwise
include any of petitioners’ gross gambling winnings that might
have been under the casinos’ reporting thresholds. Respondent
has not expressly argued that any such additional unreported
winnings should be taken into account. Accordingly, we give them
no further consideration in assessing petitioners’ allowable
gambling losses.
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