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We find petitioner’s summaries of living expenses to be
credible. Respondent did not establish the amounts of any such
expenses that were not included in the summaries of living
expenses, and respondent failed to present evidence to rebut
petitioner’s summaries of living expenses.
C. No “Increased Deficiency”
At trial and on brief, respondent alleges that Mr. Gagliardi
did not report all of his gambling winnings from the years in
issue (i.e., that he reported only the gambling winnings
(...continued)
procedure), contains guidance aimed at games of chance, such as
slot machines. But see Rev. Proc. 77-29, sec. 3.02, 1977-2 C.B.
at 539. At trial respondent’s counsel had great difficulty
explaining exactly what a “gambling log” is and what petitioner
should have recorded in a gambling log. Respondent’s counsel
stated that it was not realistic for someone to keep track of
every bet and that the revenue procedure does not require
taxpayers to keep track of every bet (i.e., the revenue procedure
does not require a taxpayer to list how much he/she bet for each
slot machine “pull”). Respondent’s counsel contended that to
keep a log for slot machine play, per the revenue procedure, a
taxpayer must know how much was wagered and how much was lost and
record it contemporaneously. But see id.
We also note that the revenue procedure provides that
“Verifiable documentation for gambling transactions includes but
is not limited to” Forms W-2G, wagering tickets, canceled checks,
credit records, and bank withdrawals--all of which are present
here. Id. sec. 3, 1977-2 C.B. at 538. Additionally, the revenue
procedure provides a method, keeping a gambling log, that the IRS
will consider as acceptable evidence for substantiation of
wagering winnings and losses. Id. It does not contain the
exclusive method for substantiating gambling losses. Id. sec. 1,
1977-2 C.B. at 538 (“The purpose of this revenue procedure is to
provide guidelines to taxpayers concerning the treatment of
wagering gains and losses for Federal income tax purposes and the
related responsibility for maintaining adequate records in
support of winnings and losses.”).
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