T.C. Summary Opinion 2001-94
UNITED STATES TAX COURT
EDDIE L. AND MARY E. CARVER, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 5566-99S. Filed June 25, 2001.
Eddie L. Carver and Mary E. Carver, pro sese.
Jason W. Anderson, for respondent.
PAJAK, Special Trial Judge: This case was heard pursuant to
the provisions of section 7463 of the Internal Revenue Code in
effect at the time the petition was filed. The decision to be
entered is not reviewable by any other court, and this opinion
should not be cited as authority. Unless otherwise indicated,
subsequent section references are to the Internal Revenue Code in
effect for the year in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure.
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Respondent determined a deficiency of $532 in petitioners'
1996 Federal income tax. Respondent conceded that petitioners
did not fail to include original issue discount of $20.75 in
their income. The sole issue for decision is whether petitioners
failed to report as income gambling winnings of $3,500.
Some of the facts in this case have been stipulated and are
so found. Petitioners resided in Wilmington, Illinois, at the
time they filed their petition.
In 1996, petitioners, who are not professional gamblers,
gambled at the Empress Casino Joliet, the Empress Casino Hammond,
and Harrah's Joliet Casino. Petitioner Mary Carver won $2,000 on
one occasion, and petitioner Eddie Carver won $1,500 on one
occasion. These amounts were reported to the Internal Revenue
Service. We accept petitioner Mary Carver’s testimony that their
gambling losses exceeded their gambling winnings. Petitioners
did not report the gambling winnings or losses on their 1996 tax
return. They did not itemize their deductions, and instead
claimed the standard deduction.
Petitioners contend that the gambling winnings should not be
included in their income because they had losses that exceeded
their winnings. Respondent contends that the winnings must be
included in petitioners' income.
Gross income includes all income from whatever source
derived, including gambling winnings. Sec. 61(a); Commissioner
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v. Groetzinger, 480 U.S. 23, 34 (1987). Gambling losses are
deductible only to the extent of the taxpayer's winnings from
such transactions. Sec. 165(d); sec. 1.165-10, Income Tax Regs.
Taxpayers not engaged in the trade or business of gambling must
report all gambling winnings as gross income and may claim
gambling losses only as an itemized deduction to the extent of
the gambling income. McClanahan v. United States, 292 F.2d 630,
631-632 (5th Cir. 1961).
We hold that petitioners must include the $3,500 of gambling
winnings in their income. Petitioners have no other itemized
deductions to add to the $3,500 of gambling losses which were
eligible to be taken as an itemized deduction. Petitioners
benefited from the election of the standard deduction of $6,700.
Accordingly, we sustain respondent's determination on this issue.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
under Rule 155.