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extent deductible under section 165(d), would be deductible as an
itemized deduction in the computation of taxable income. See,
e.g., Gajewski v. Commissioner, 84 T.C. 980, 982 (1985); Johnston
v. Commissioner, 25 T.C. 106, 108 (1955); see also secs. 67(a),
68(a), 151(d)(3).
In general, section 162(a) allows a deduction for all
ordinary and necessary expenses paid or incurred during the
taxable year in carrying on a trade or business. The term “trade
or business” is not defined in the Internal Revenue Code or the
regulations. That said, it is well established that in order for
an activity to be considered a trade or business for the purposes
of section 162, the activity must be conducted with “continuity
and regularity” and “the taxpayer’s primary purpose for engaging
in the activity must be for income or profit.” Commissioner v.
Groetzinger, 480 U.S. 23, 35 (1987).
Petitioner testified at trial that playing video poker
totally consumed his free time and caused him to lose a lot of
money. But simply spending all of one’s free time on an activity
does not transform that activity into a trade or business, nor
does it make the participant a professional. Occasionally,
devoting all of one’s free time to a particular activity may be a
sign of addiction.9 Further, the amount of time spent engaged in
9 At trial, petitioner testified that he had himself barred
from his usual casinos for 5 years to prevent him from continuing
to gamble there.
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