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In October of 2001, respondent began an audit of decedent’s
2000 Federal income tax return.
During respondent’s audit, the accountant who had prepared
decedent’s 2000 Federal income tax return provided to
respondent’s examining agent some documents relating to
decedent’s gambling activities. However, no diary or log
reflecting decedent’s specific gambling winnings and losses was
provided to respondent’s agent.
In late 2001 or early 2002, respondent’s audit examination
was closed, and a 30-day letter was issued to decedent in which
respondent proposed to allow $487,836 and to disallow $2,092,364
of decedent’s total claimed $2,580,200 gambling losses for 2000.
The proposed disallowance of $2,092,364 in claimed gambling
losses was based on the agent’s understanding that the documents
that had been provided to respondent by decedent’s accountant
substantiated only $487,836 in gambling losses.
Based on the claimed gambling losses to be disallowed,
respondent’s examining agent proposed a deficiency of $812,224 in
decedent’s 2000 Federal income tax.
As indicated, on January 12, 2002, decedent died.
In early 2002, decedent’s accountant filed on behalf of
decedent’s estate a protest to respondent’s proposed disallowance
of gambling losses, and an Appeals Office hearing was requested
on behalf of decedent.
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Last modified: May 25, 2011