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Respondent determined a deficiency of $6,161 in petitioner’s
Federal income tax for 2001, and a section 6662(a) penalty of
$1,232.
The issues for decision are: (1) Whether petitioner’s
gambling activity amounted to a trade or business under section
162, thereby allowing her to deduct gambling losses on Schedule
C, Profit or Loss From Business, of her Federal income tax
return, and (2) whether petitioner is liable for the section
6662(a) penalty.
Some of the facts were stipulated. Those facts, with the
exhibits annexed thereto, are so found and are made part hereof.
Petitioner’s legal residence at the time the petition was filed
was Sparks, Nevada.
Before entering the flower business, petitioner completed
her freshman year of high school and had some floral industry
training. Petitioner then opened a flower shop in Reno, Nevada.
The Flower Bucket Florist (flower shop) was organized as a
corporation with petitioner as the sole stockholder. At the time
of trial, petitioner’s flower shop was open 12 hours a day,
Monday through Saturday, and a few hours on Sunday. The flower
shop paid petitioner a $66,310 salary during 2001.
In addition, petitioner operated as sole stockholder another
business, F.B. Wholesale, Inc. (F.B. Wholesale), which was a
wholesale market that purchased flowers from growers and brokers
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Last modified: May 25, 2011