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Respondent determined a deficiency of $13,170 in
petitioners’ 2001 Federal income tax. The issue is whether
petitioners are entitled to deduct certain gambling losses.
Petitioners resided in Oneida, Wisconsin, when the petition in
this case was filed.
Background
The facts may be summarized as follows. During 2001,
petitioners were recreational gamblers who played slot machines.
Petitioners had winnings of at least $44,464 from these
activities that were reported to the Internal Revenue Service.
See sec. 7.6041-1, Temporary Proced. & Admin. Regs., 42 Fed. Reg.
1471 (Jan. 7, 1977). On their joint 2001 Form 1040, U.S.
Individual Income Tax Return, petitioners reported gambling
income of $21,100 and gambling losses of the same amount on
Schedule A, Itemized Deductions. Respondent determined that
petitioners received gambling income of $44,464 and disallowed
the deduction for gambling losses on the ground that petitioners
failed to substantiate any losses.
Petitioners do not dispute the increase in gambling income.
Petitioners, however, argue that they have substantiated their
losses. They claim that the funds for each trip to the local
casinos is shown by cash withdrawals on credit cards or bank
account debit cards. Their statements from these accounts show
activities at the casinos. In addition, they reconstructed their
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