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Commissioner, 359 F.2d 64 (1st Cir. 1966), affg. T.C. Memo. 1965-
247; Stein v. Commissioner, 322 F.2d 78, 83 (5th Cir. 1963),
affg. T.C. Memo. 1962-19; Schooler v. Commissioner, 68 T.C. 867,
871 (1977); Lutz v. Commissioner, T.C. Memo. 2002-89.
In Doffin, the taxpayer had pull tab winnings of $46,240 and
$32,571 for 1986 and 1987, respectively. The taxpayer did not
keep contemporaneous records of his daily winnings and losses and
did not retain any losing tickets to substantiate his losses.
The Commissioner allowed the taxpayer a deduction for gambling
losses in the amount of $494 for 1986, which was based on the $2
per pull tab cost of the taxpayer’s 247 winning pull tabs for
that year. Pursuant to the rule of Cohan, the Court allowed the
taxpayer to deduct additional losses of $39,000 and $26,000 for
1986 and 1987, respectively. The Court’s approximation of the
taxpayer’s gambling losses pursuant to the rule of Cohan was
based on the Court’s finding that it was highly improbable that
the taxpayer purchased only winning tickets, and that the
taxpayer’s lifestyle and financial position indicated no
accessions to wealth commensurate with the amount of net gambling
winnings determined by the Commissioner. The taxpayer lived in a
mobile home, had little income and few assets, and even sold
assets and borrowed money during the years at issue to support
his gambling habit.
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