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Mr. Gagliardi knew that all of the Forms W-2G issued by the
casinos would be reported to the Internal Revenue Service (IRS).
Occasionally the casinos made errors on the Forms W-2G issued to
Mr. Gagliardi. When he noticed the errors, he would call the
casinos and they would correct these errors.
Mr. Gagliardi retained all his receipts and records related
to his gambling winnings and losses, including but not limited
to: ATM receipts, copies of checks cashed at the casinos, bank
and credit card statements reflecting withdrawals made at the
casinos, and Forms W-2G he received from the casinos. Mr.
Gagliardi provided his tax return preparer (Mr. Hunner) with all
his receipts and records related to his gambling winnings and
losses for use in preparing Mr. Gagliardi’s income tax returns
for the years in issue. This was the same method employed by Mr.
Gagliardi and Mr. Hunner when Mr. Gagliardi owned American
Redball (his trucking business), and Mr. Gagliardi provided the
similar records and receipts to Mr. Hunner. Mr. Gagliardi
believed that the records he provided to Mr. Hunner substantiated
his expenses (i.e., gambling losses), just as with American
Redball.
Mr. Gagliardi’s Tax Returns and Respondent’s Determinations for
1999, 2000, and 2001
Federal income tax of $186,621, $186,623, $183,431 (totaling
$556,675) was withheld from the gross annual lottery payments
made to Mr. Gagliardi during 1999, 2000, and 2001, respectively.
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Last modified: March 27, 2008