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Petitioner was issued Forms W-2G, Certain Gambling Winnings,
totaling $38,800 by the casinos that he frequented. On Schedule
C, Profit or Loss From Business, attached to petitioners’ joint
2001 Federal income tax return, petitioner reported this amount
as income and claimed deductions for gambling losses of $68,861,2
tolls of $149, automobile expenses of $421, and other expenses of
$1,157. Petitioner claimed an overall loss of $31,788 from the
trade or business of gambling. In the notice of deficiency,
dated March 15, 2004, respondent allowed a deduction for gambling
losses of $38,800 on Schedule A, Itemized Deductions, and
disallowed the balance of the deductions claimed on Schedule C.
The amount of the deficiency was $9,934. The notice was issued
from the Brookhaven Internal Revenue Service Center (referred to
herein as the Service Center), in Holtsville, New York.
Petitioners mailed their petition to this Court on June 12, 2004.
By letter dated June 1, 2004, the Service Center proposed a
revised deficiency of $5,681. Although the statement disallows
gambling losses in excess of gambling income, the proposed
changes in the income and losses do not relate to either the
figures on petitioner’s Schedule C or the statutory notice. The
letter provides that petitioners must sign and date the “total
agreement statement” and return it. The total agreement
statement provided:
2 Figures are rounded to the nearest dollar.
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