Burrell v. IRS, T.C. Memo 2014-217 (October 14, 2014).
Believe it or not, losses incurred while gambling are deductible for those who are engaged in the “trade or business” of gambling and to the extent the taxpayer has gains attributable to “wagering.” IRC Sec. 165(d). However, the IRS and Tax Court are suspicious of such deductions. A taxpayer who hopes to successfully claim this deduction by means of contemporaneous records (i.e. accurate self-kept records made at or near the time of the transactions they evidence) needs to do more than just record the amount of money with which he or she enters the casino. In yesterday’s** Burrell v. IRS, the taxpayer failed to also record the amount of money with which she left the casino each day. T.C. Memo 2014-217, 7 (October 14, 2014). The IRS and Tax Court affirmed the deficiency against her and the accuracy-related penalties for underreporting based on the taxpayer’s failure of proof.
** At least one Tax Court clerk appears to have celebrated Columbus Day right!
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