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corresponding $1,311,200 in gambling losses.7 For the year in
issue, petitioner did not keep books and records of his win/loss
activity and instead relied on the casinos’ yearly statements to
track his activity for him.
Respondent determined that petitioner was not a professional
gambler in 2003. Accordingly, his gambling winnings should have
been reported on line 21 of the Form 1040, U.S. Individual Income
Tax Return (Other income). Respondent also determined that the
gambling losses should have been claimed on Schedule A, Itemized
Deductions.
Discussion
The issue in this case is whether petitioner’s gambling
activity in 2003 constituted a trade or business under section
162. If petitioner were engaged in the trade or business of
gambling, his wagering losses, to the extent deductible under
section 165(d),8 would be deducted in computing adjusted gross
income. See sec. 62. On the other hand, if petitioner were not
in the trade or business of gambling, wagering losses, to the
7 In addition to the $1,311,200 in income and losses from
gambling, petitioner also reported $3,000 of “Other income” and
$2,820 of “Car and truck expenses” on his Schedule C, neither of
which is contested by respondent. Respondent did not raise any
substantiation issues as to any of the amounts.
8 While sec. 165(a) generally allows losses to be deducted
from gross income, sec. 165(d) provides that “losses from
wagering transactions shall be allowed only to the extent of the
gains from such transactions.”
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