George E. and Gloria Tschetschot - Page 3

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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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