Jimmie L. Clemons - Page 4

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               Petitioner timely filed his Federal income tax return for              
          the 2001 taxable year. On Form 1040, U.S. Individual Income Tax             
          Return, for taxable year 2001, petitioner reported capital gain             
          income of $1,663.13.  Petitioner did not report any other income.           
          Petitioner also claimed a personal exemption and the standard               
          deduction.  Petitioner did not attach a Schedule A, Itemized                
          Deductions, to his Form 1040.                                               
               During taxable year 2001, petitioner was retired.                      
          Petitioner gambled at Harrah’s Cherokee Smokey Mountain Casino              
          (Cherokee Casino), and during taxable year 2001, petitioner                 
          received gambling winnings of $44,833 from Cherokee Casino.                 
               Both petitioner and respondent received seven Forms W-2G,              
          Certain Gambling Winnings, for taxable year 2001, all seven of              
          which were from Cherokee Casino in the amounts of $16,000,                  
          $2,500, $4,000, $4,000, $4,500, $12,583, and $1,250, for a total            
          of $44,833.  Petitioner attached these Forms W-2G to his 2001               
          Form 1040, but, as previously stated, he did not report the                 
          amounts as gross income.  From these Forms W-2G, respondent                 
          determined that petitioner had unreported gambling income of                
          $44,833 for taxable year 2001.                                              
               Accordingly, in the notice of deficiency for taxable year              
          2001, dated November 3, 2003, respondent determined that                    
          petitioner must include gambling winnings in the amount of                  
          $44,833 in his gross income.  Respondent also determined that               






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