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Commissioner, supra; Mayer v. Commissioner, supra (disallowing
unsubstantiated slot machine losses). Petitioners could have
avoided this result by keeping records of their gambling
activities or perhaps by simply using their Players’ Club cards
to track their slot machine play at the Casinos Magic. Instead,
they spun the wheel with the tax laws and therein made a losing
wager.
Accordingly, we allow petitioners no gambling losses for
1996, although, as previously discussed, we adjust downward (from
$91,000 to $86,705) respondent’s determination of petitioners’
unreported gross income from gambling, to account for
petitioners’ cost of making the winning slot machine bets at the
Casinos Magic.
Accuracy-Related Penalty
Respondent determined that petitioners are liable for an
accuracy-related penalty under section 6662(a) for a substantial
understatement of tax. Section 6662(a) imposes an accuracy-
related penalty equal to 20 percent of any underpayment that is
attributable to a substantial understatement of income tax.
Section 6662(d)(1) defines a “substantial understatement” of
income tax as one which exceeds the greater of 10 percent of the
tax required to be shown on the return or $5,000. The accuracy-
related penalty does not apply with respect to any portion of the
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