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rental real estate activity and who may otherwise deduct up to
$25,000 of a rental real estate loss, see sec. 469(i)(1) and (2),
must reduce that $25,000 figure by 50 percent of the amount by
which their adjusted gross income exceeds $100,000, see sec.
469(i)(3). We understand petitioners to be making three
arguments in support of their claim that respondent’s
determination is wrong. First, petitioners argue that their
lottery winnings are not includable in their 2000 gross income
because they are neither professional nor part-time gamblers.
Second, petitioners argue that their lottery winnings are not
includable in their adjusted gross income for purposes of section
469(i)(3). Third, petitioners argue that, if their first two
arguments are wrong, the Court should recognize that they are in
a tight financial bind and apply equitable principles to allow
them to deduct at least half of their rental real estate loss.
We disagree with petitioners’ first argument that their 2000
gross income does not include their lottery winnings. The wide
reach of section 61(a) brings within a taxpayer’s gross income
all accessions to wealth, United States v. Burke, 504 U.S. 229,
233 (1992), and an accession to wealth on account of gambling
winnings is no exception, see, e.g., Lyszkowski v. Commissioner,
T.C. Memo. 1995-235 (and cases cited therein), affd. without
published opinion 79 F.3d 1138 (3d Cir. 1996). Contrary to
petitioners’ claim, an accession to wealth on account of gambling
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Last modified: May 25, 2011