- 8 - petitioner was operating an illegal gambling enterprise in 1999. Thus, the deduction asserted by petitioners falls conceptually within the ambit of section 165(a) and (c)(1). Courts have consistently found that a loss deduction will be denied, however, where the deduction would frustrate a sharply defined Federal or State policy. See, e.g., Wood v. United States, 863 F.2d 417, 420-422 (5th Cir. 1989); United States v. Algemene Kunstzijde Unie, N.V., 226 F.2d 115, 119-120 (4th Cir. 1955); Fuller v. Commissioner, supra at 105-106; Blackman v. Commissioner, 88 T.C. 677, 682-683 (1987), affd. without published opinion 867 F.2d 605 (1st Cir. 1988); Holmes Enters., Inc. v. Commissioner, supra at 117-118; Holt v. Commissioner, supra at 79-81; Murillo v. Commissioner, T.C. Memo. 1998-13, affd. without published opinion 166 F.3d 1201 (2d Cir. 1998); Bailey v. Commissioner, supra; Mack v. Commissioner, supra; Farris v. Commissioner, supra; Hopka v. United States, 195 F. Supp. 474, 477-483 (N.D. Iowa 1961); see also King v. United States, 152 F.3d 1200, 1202 (9th Cir. 1998); Standard Oil Co. v. Commissioner, 129 F.2d 363, 370-371 (7th Cir. 1942), affg. 43 B.T.A. 973 (1941). Respondent contends that petitioners should not be allowed a loss deduction for the cash that petitioner forfeited to the State of South Carolina because the allowance of such a deduction would frustrate South Carolina’s sharply defined policy against illegal gambling. Petitioners assert, without citation ofPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011