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Mohammadpour’s accounting services business.2 Petitioners
included a second Schedule C with their return in which they
reported $83,451 of gross income from Mr. Mohammadpour’s gambling
activity which was offset by gambling losses in the same amount.3
On the basis of information provided to respondent by means
of Form W-2G, Certain Gambling Winnings,4 respondent adjusted
petitioners’ 2003 return to reflect gross income from gambling of
$84,730 ($1,279 more than petitioners reported), as well as an
additional $3 of interest income. Petitioners do not dispute
these adjustments. Respondent also determined that Mr.
Mohammadpour’s gambling activity did not constitute a trade or
business, and therefore his losses from gambling should not have
2In their 2001 return, petitioners reported $76,181 of wage
income and $7,252 of net profit from Mr. Mohammadpour’s
accounting services business. In 2002, petitioners reported
$60,638 of wage income and $26,712 of net profit from Mr.
Mohammadpour’s accounting services business. In 2004,
petitioners reported $41,986 of wage income and $50,900 of net
profit from Mr. Mohammadpour’s accounting services business.
Petitioners consistently reported Mr. Mohammadpour’s occupation
as that of accountant.
3Petitioners first reported Mr. Mohammadpour’s gambling
activity on their 2001 return, where they reported $3,333 of
gambling income and claimed a deduction of $3,333 on Schedule A,
Itemized Deductions, for a gambling loss. In their 2002 return,
petitioners reported, by means of Schedule C, $23,793 of gambling
income offset by gambling losses in the same amount. In their
2004 return, petitioners reported, by means of Schedule C,
$75,347 of gambling income offset by gambling losses in the same
amount.
4Generally, gambling winnings are reportable to the Internal
Revenue Service (IRS) by the payer (with a statement provided to
the winner) if the payment is $600 or more. See sec. 6041(a).
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Last modified: November 10, 2007