George E. and Gloria Tschetschot - Page 1

                                 T.C. Memo. 2007-38                                   

                               UNITED STATES TAX COURT                                

                  GEORGE E. AND GLORIA TSCHETSCHOT, Petitioners v.                    
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 9498-03.             Filed February 20, 2007.               

                    R disallowed losses in excess of Ps’ winnings from                
               gambling and determined both a deficiency and a penalty                
               for substantial understatement for 2000.  After                        
               conceding that H’s net gambling losses were not                        
               properly deductible, Ps argued that, as a professional                 
               tournament poker player, W’s net losses should be                      
               treated the same as those of any other professional                    
               sport participants.                                                    
                    Held:  W’s net gambling losses are not exempt from                
               the limitations of sec. 165(d), I.R.C.                                 
                    Held, further:  We leave for the parties to                       
               determine as part of their computations under Rule 155,                
               Tax Court Rules of Practice and Procedure, whether                     
               there was a substantial understatement for the taxable                 
               year in issue; if so, Ps are liable for the accuracy-                  
               related penalty.                                                       

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