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Section 61(a) defines gross income as “all income from
whatever source derived,” including gambling, unless otherwise
provided. McClanahan v. United States, 292 F.2d 630, 631-632
(5th Cir. 1961). The Supreme Court has consistently given this
definition of gross income a liberal construction “in recognition
of the intention of Congress to tax all gains except those
specifically exempted.” Commissioner v. Glenshaw Glass Co., 348
U.S. 426, 430 (1955); see also Roemer v. Commissioner, 716 F.2d
693, 696 (9th Cir. 1983) (all realized accessions to wealth are
presumed taxable income, unless the taxpayer can demonstrate that
an acquisition is specifically exempted from taxation), revg. 79
T.C. 398 (1982).
Section 62 defines adjusted gross income and allows expenses
of a trade or business and certain employee business expenses to
be deducted from gross income. These deductions are sometimes
referred to as deductions “above the line,” meaning simply that
they are deducted from gross income to arrive at “adjusted gross
income.” Gamblers who are engaged in a trade or business of
gambling may be able to deduct their gambling losses above the
line; indeed, courts have based their decisions in some cases on
the proposition that such a professional gambler may net losses
against winnings for purposes of determining what is includable
in gross income. See Winkler v. United States, 230 F.2d 766 (1st
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Last modified: May 25, 2011