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whether a penalty under section 6662(a) for a substantial
understatement of income tax is appropriate.
FINDINGS OF FACT
At the time the petition was filed, petitioners resided in
Cedar Rapids, Iowa.
Mrs. Tschetschot is a database project engineer. She was
also a professional tournament poker player in 2000.2 Mr.
Tschetschot is not a professional gambler but occasionally plays
slot machines and blackjack while accompanying his wife on her
poker tournament trips.
Tournament poker is somewhat different from “live-action”
poker. A poker tournament consists of a series of individual
events hosted by a casino, and it can last anywhere from several
days to 2 weeks. Unlike live-action poker, tournament
participants cannot exit the game by cashing out partway through
the tournament; tournaments are played until there is one player
left with all of the chips.
All tournaments have a “buy-in”, or entrance fee, that is
paid by the tournament participants to the tournament organizer.
A portion of this amount is an administrative fee kept by the
casino hosting the event, and the remainder goes directly into
the prize fund “pot” that will ultimately be paid out to the
2 Respondent stipulated this fact for purposes of this case
only. There are no substantiation issues in this case.
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