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to the sum of the amounts shown as income on the Forms W-2G that
Mr. Gagliardi received from the casinos. Additionally, for 1999,
Mr. Hunner added $1,610 for losses from lottery scratchers. Mr.
Hunner, to be conservative, did not include cash withdrawals Mr.
Gagliardi made outside the casinos (thousands of dollars)--e.g.,
at 7-Eleven--in calculating the amounts of Mr. Gagliardi’s
gambling losses. Mr. Hunner calculated and reported the amounts
of Mr. Gagliardi’s gambling losses on Mr. Gagliardi’s returns for
the years in issue on the basis of the fact that Mr. Gagliardi
left the casinos with no money or if he left with money, he
returned the following day to the casino and lost it all. All
gifts that Mr. Gagliardi made during the years in issue were
accounted for in determining the reasonableness of the amounts of
gambling losses claimed for the years in issue.
In 1999, Mr. Gagliardi received a Federal income tax refund
of $153,669 for 1998. In 2000, Mr. Gagliardi received a Federal
income tax refund of $104,655 for 1999. Petitioner lost his 1998
and 1999 refunds gambling at the casinos.
Mr. Gagliardi timely filed his Federal individual income tax
return for 1999. In May 2003, Mr. Gagliardi submitted his 2000
and 2001 Forms 1040, U.S. Individual Income Tax Return (2000 and
2001 returns). Mr. Gagliardi did not timely file his 2000 and
2001 returns because: (1) He was entitled to a refund for each
year; (2) he thought if he did not file returns, then the refunds
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