Jose Calvao - Page 3

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               During 2002, petitioner played the slot machines at several            
          casinos throughout the United States.2  Petitioner spent most of            
          his time at Foxwoods Resort and Casino in Connecticut, which was            
          approximately 100 miles from his home.  The casinos issued                  
          petitioner Forms W-2G, Certain Gambling Winnings, for 2002,                 
          reflecting gross winnings of $132,800. Prior to filing his 2002             
          Federal income tax return, petitioner prepared a summary of his             
          gambling activity (the gambling summary).  The gambling summary             
          reflected that petitioner gambled on 24 separate occasions, won a           
          total of $132,800, and lost a total of $180,300.                            
               Petitioner timely filed his 2002 Federal income tax return.3           
          Petitioner reported the following sources of income: (1) Wage               
          income from Caltex of $42,000; (2) taxable interest of $7,676;              
          (3) ordinary dividends of $3,176; (4) taxable State income tax              
          refund of $3,224; and (5) income from rental real estate, S                 
          corporations, and trusts of $109,403.4  On an attached Schedule             
          C, Profit or Loss From Business, petitioner reported that his               


               2  Petitioner occasionally played Carribean stud poker, but            
          the slot machine was his preferred game.                                    
               3  Petitioner’s return was prepared by Norman R. Beauregard            
          (Mr. Beauregard), who identified himself on the return as a                 
          certified public accountant.  There is nothing else in the record           
          regarding Mr. Beauregard’s experience or qualifications.                    
               4  The income from rental real estate, S corporations, and             
          trusts included a total rental real estate loss of $6,047, a                
          passthrough of income from Caltex of $99,790, and trust income of           
          $15,660.                                                                    





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