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activities produced a net loss for 2004. Petitioners are
contesting only the propriety of increasing their adjusted gross
income. They have not contested the accuracy of the
computational adjustments that flow from increasing their
adjusted gross income.
Discussion
Gross income includes all income from whatever source
derived, including gambling income. See sec. 61; Jackson v.
Commissioner, T.C. Memo. 2007-373. The jackpots that petitioners
received constitute gambling income. A taxpayer in the trade or
business of gambling may deduct wagering losses to the extent
allowable in computing adjusted gross income. A taxpayer who was
not in the trade or business of gambling may deduct wagering
losses only to the extent allowable as an itemized deduction to
compute taxable income. See Calvao v. Commissioner, T.C. Memo.
2007-57. Petitioners were not professional gamblers and were not
in the trade or business of gambling. Therefore, their gambling
losses were not deductible in arriving at adjusted gross income,
and respondent’s determination to increase petitioners’ adjusted
gross income by the amount of jackpots received in 2004 was
correct. Since that resolves the only issue petitioners raised
regarding the tax deficiency, respondent’s deficiency
determination of $4,190 is sustained.
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Last modified: March 27, 2008