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Groetzinger, 480 U.S. 23, 32 n.11 (1987) (characterizing a State
lottery as “public gambling” in a case treating gambling earnings
as ordinary income); United States v. Maginnis, 356 F.3d 1179,
1183 & n.6 (9th Cir. 2004) (taxpayer’s lottery winnings enter
into the section 165(d) calculation as wagering gains that
taxpayer’s gambling losses at the casinos can be applied to in
addition to taxpayer’s gambling winnings at the casinos).
Our resolution of this dispute turns mainly on a
determination of the credibility of the evidence presented. The
determination of the truth of a matter on the basis of the oral
and documentary evidence “epitomizes the ultimate task of a trier
of the facts--the distillation of truth from falsehood which is
the daily grist of judicial life.” See Diaz v. Commissioner, 58
T.C. 560, 564 (1972). We “must be careful to avoid making the
courtroom a haven for the skillful liar or a quagmire in which
the honest litigant is swallowed up. Truth itself is never in
doubt, but it often has an elusive quality which makes the search
for it fraught with difficulty.” Id.; Hawkins v. Commissioner,
T.C. Memo. 1993-517, affd. without published opinion 66 F.3d 325
(6th Cir. 1995).
We determine the credibility of each witness, weigh each
piece of evidence, draw appropriate inferences, and choose
between conflicting inferences. See Neonatology Associates, P.A.
v. Commissioner, 115 T.C. 43, 84 (2000), affd. 299 F.3d 221 (3d
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