Thomas L. & C. Marlene Pias - Page 6

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          arriving at the adjusted gross income on Schedule C.  If                    
          petitioner’s gambling activity did not constitute a trade or                
          business, his gambling losses would be deductible as an itemized            
          deduction in arriving at taxable income on Schedule A.  Sec.                
          63(a).  But, regardless whether or not the activity constituted a           
          trade or business, section 165(d) provides that “Losses from                
          wagering transactions shall be allowed only to the extent of the            
          gains from such transactions.”  See also sec. 1.165-10, Income              
          Tax Regs.  Petitioner does not dispute that section 165(d)                  
          applies here.                                                               
               Petitioner claims to be in the trade or business of                    
          gambling, and we are, therefore, faced with the question whether            
          he is entitled to claim deductions on Schedule C.  In                       
          Commissioner v. Groetzinger, 480 U.S. 23, 35 (1987), the Supreme            
          Court held that “if one’s gambling activity is pursued full time,           
          in good faith, and with regularity, to the production of income             
          for a livelihood, and is not a mere hobby, it is a trade or                 
          business”.  We are willing to assume that petitioner did devote             
          many hours at the casinos playing video poker with some degree of           
          regularity.  We are not satisfied, however, that petitioner                 
          looked to this activity for a production of income for his                  
          livelihood.  Petitioner’s explanation for his activity was that             
          at the end of 2000 he “was in what I thought was a lucky streak.”           
          This explanation rings more of a pastime or a hobby than of an              

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