*1522 Held, the members of a partnership which is engaged in the business of accepting wagers on horse races may deduct their individual losses from wagering transactions against their distributive shares of partnership gains. Jennings v. Commissioner, 110 Fed.(2d) 945; certiorari denied, 311 U.S. 704">311 U.S. 704, followed.
*273 These duly consolidated proceedings are brought to redetermine deficiencies in income tax for the calendar year 1936 as follows:
| Name | Docket No. | Deficiency |
| William H. Joseph | 96036 | $338.24 |
| Ben Levy | 96037 | 743.76 |
| Louis Streicker | 96038 | 39.66 |
Part of the deficiency has been settled. Effect will be given thereto under Rule 50. The only question remaining is whether losses sustained by the petitioners as a result of betting on horse races may be deducted from their distributive shares of partnership income, where the business of the partnership was making and accepting wagers on horse races.
FINDINGS OF FACT.
Petitioners are members of a partnership known as the Horton News Service. *1523 In 1936 the partnership was composed of the three petitioners, Joe Gleason, and Betty Lipschultz. The only business of the partnership during 1936 was that of wagering on horse races. Prior to that year it had been the practice of the partners both to make and accept wagers as an entity, but after the death of one of the partners, and in order not to jeopardize the share of his widow, Betty Lipschultz, it was decided that the partnership would only accept bets and would not make them in the partnership name. The individual partners, however, were free to make such wagers as they chose. They frequently made them through the partnership, and when they did so they *274 were treated precisely the same as regular outside clients of the Horton News Service.
At the end of the year the partnership profits, consisting of the excess of money won over money lost on races, was divided equally among the five partners. Partnership winnings consisted of the aggregate of collections from the individual bets of customers who had lost. From time to time it was the practice of the partnership to "lay out" bets placed with it to other bookmakers, that is, to call another bookmaker on*1524 the telephone and ask him if he would accept the particular wager which the partnership itself did not desire to carry. The partnership neither gained nor lost on these outside bets, But merely collected a commission thereon from the other bookmaker. As a result of their wagering for the year 1936 petitioners had losses in the following amounts:
| William H. Joseph | $3,728.45 |
| Ben Levy | 7,376.75 |
| Louis Streicker | 190.55 |
In their returns they deducted their individual losses from their distributive shares of partnership income. The respondent in his deficiency notices disallowed the deduction of these losses on the sole ground that they were not partnership losses and were not deductible from income as individual losses under the provisions of the Revenue Act of 1936.
OPINION.
LEECH: It appears that the only issue presented by the notice of deficiency and the pleadings is the deductibility of certain individual gambling losses sustained by the petitioners from their distributive shares of income from a gambling partnership, in computing the petitioners' net income. Consequently no other issues can be considered. *1525 ; .
Section 23(g) of the Revenue Act of 1936 provides that "Losses from wagering transactions shall be allowed only to the extent of the gains from such transactions."
Section 181 of the Revenue Act of 1936 provides that "Individuals carrying on business in partnership shall be liable for income tax only in their individual capacity."
Section 182 provides that "There shall be included in computing the net income of each partner his distributive share, whether distributed or not, of the net income of the partnership for the taxable year."
Section 183 provides that "The net income of the partnership shall be computed in the same manner and on the same basis as in the case of an individual."
*275 That the deductions sought by these petitioners are allowable within the above-cited sections has been settled by the case of , as to which the Supreme Court has recently denied certiorari, *1526 . See also . We, therefore, hold that petitioners are entitled to the contested deductions.
Decisions will be entered under Rule 50.