- 3 -
gambling losses but only to the extent of gambling winnings.
Petitioner stipulated that she received gambling winnings in
the amount of $9,180 during taxable year 2000. In the notice of
deficiency, respondent allowed petitioner a deduction for
itemized deductions, including gambling losses equal to her
gambling winnings.
We find that the unreported $9,180 of gambling winnings is
includable in petitioner’s adjusted gross income for the taxable
year 2000. As a result, petitioner’s adjusted gross income was
properly increased from $11,835 to $21,015. There is no argument
or evidence from petitioner that she was in the trade or business
of gambling. Thus her gambling losses are deductible only as
itemized deductions, not from gross income, in arriving at
adjusted gross income. Her gambling winnings therefore result in
a dollar-for-dollar increase to her adjusted gross income.
Torpie v. Commissioner, T.C. Memo. 2000-168.
Section 32(a)(1) allows an earned income tax credit to
eligible individuals. Section 32(a)(2) provides that the
allowable credit shall be phased out if “the modified adjusted
gross income (or, if greater, the earned income) of the taxpayer
for the taxable year” exceeds a prescribed amount. Section
32(c)(5) defines modified adjusted gross income as “adjusted
gross income determined without regard to” adjustments not
relevant here. There is no provision in section 32 that excludes
Page: Previous 1 2 3 4 Next
Last modified: May 25, 2011