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substantial wage income. Yet petitioners reported neither
gambling winnings nor gambling losses on their Federal income tax
return, nor did they disclose this omission on their return.
On brief, petitioners argue that they are not liable for the
accuracy-related penalty because they believed their gambling
losses exceeded their gambling winnings and “in good faith with
reasonable cause under a wrong assumption did not report the
gambling winnings.” It is well settled that taxpayers have a
duty to report as gross income gambling winnings such as those
involved here; gambling losses must be claimed as itemized
deductions, subject to statutory limitations. See McClanahan v.
United States, 292 F.2d at 631-632; Gajewski v. Commissioner, 84
T.C. at 982; Johnston v. Commissioner, 25 T.C. 106, 108 (1955).
Taxpayers are required to take reasonable steps to determine the
law and comply with it. Niedringhaus v. Commissioner, 99 T.C.
202, 222 (1992). The record does not indicate that petitioners
took any such steps or that any portion of their underpayment was
due to reasonable cause.
Accordingly, we conclude that petitioners are liable for an
accuracy-related penalty under section 6662(a).
To reflect the foregoing,
Decision will be entered
under Rule 155.
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