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have purchased only winning tickets, the Court applied the rule
of Cohan v. Commissioner, 39 F.2d 540 (2d Cir. 1930), to estimate
the amount of the taxpayer’s gambling losses.
Unlike Doffin v. Commissioner, supra, this is not a case
where the taxpayers had few assets, no income apart from
gambling, and no significant accessions to wealth during the year
at issue. Petitioners have admitted to an increase in their net
worth for 1996 that corresponds roughly to the amount of
unreported gambling income that respondent has determined.
Petitioners introduced into evidence unaudited statements of
financial position, purporting to show the change in their net
worth during 1996. These documents indicate that during 1996
petitioners’ net worth increased by $89,503 (from $542,275 to
$631,778). These documents indicate that during 1996 petitioners
purchased, among other things, a new Chevrolet Suburban and a
motorcycle, and that the value of their interest in Mega
increased by some $70,000 during 1996.13 In short, we are unable
to conclude on the basis of the evidence in the record that
petitioners’ significant accessions to wealth in 1996 were not
13 Although petitioners testified that they did not put any
gambling winnings into Mega, we note that in 1996 Mega paid Laura
$24,000, even though she performed no services for Mega. In this
regard, Paula testified that Mega “paid my husband and I, since
we owned the company * * * they wrote us a check. But I didn’t
do anything.” These peculiar circumstances raise the suggestion,
if not the likelihood, that Mega’s assets and petitioners’
separate assets were to some degree fungible.
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