- 3 -
On their 2004 Federal income tax return, petitioners
reported adjusted gross income of $145,694 which did not include
any of the jackpots. Petitioners did not claim deductions on
their 2004 return for any of their gambling losses. Petitioners
did not report their gambling jackpots and losses because their
gambling activities failed to produce net winnings in 2004.
After examining petitioners’ 2004 return, respondent
determined that petitioners’ casino jackpots were gambling
winnings and increased petitioners’ adjusted gross income by
$208,420. Respondent also determined that petitioners were
entitled to itemized deductions for gambling losses of $208,420.
While respondent allowed itemized deductions for gambling
losses in the same amount that he increased petitioners’ adjusted
gross income, the increase in adjusted gross income triggered
certain limitations on other deductions. As a result, respondent
disallowed a $490 tuition deduction, disallowed job-related and
miscellaneous expenses of $4,178, decreased total itemized
deductions by $6,267, and disallowed a $6,200 deduction for
personal exemptions. These adjustments, based on respondent’s
adjustment to petitioners’ adjusted gross income, are
computational adjustments required by law.
In their petition, petitioners claim that it makes no sense
to increase their adjusted gross income because their gambling
Page: Previous 1 2 3 4 5 6 7 Next
Last modified: March 27, 2008