- 5 -
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
Page: Previous 1 2 3 4 5 6 7 8 Next
Last modified: May 25, 2011