TAX COURT OPINION

Case: Terry Lewis Liend
Docket Number: 18765-08S
Judge: Colvin
Opinion Type: bench
Filed: 05/22/2009
Pages: 5

VP UNITED STATES TAX COURT WASHINGTON , DC 2021 7 TERRY LEWIS LIEND , Petitione r V . COMMISSIONER OF INTERNAL REVENUE, ) Respondent O R D E R Pursuant to Rule 152(b), Tax CourtiRules of Practice and Procedure, it i s ORDERED that the Clerk of the Court shall transmit herewith to petitioner and to respondent a copy of the pages of the transcript of the trial of the above case before Chief Special Trial Judge Peter J . Panuthos at St . Paul, Minnesota, on April 22, 2009, containing his oral findings of fact and opinion rendered at the conclusion of trial . In accordance with the oral findiyfg of fact and opinion , decision will be entered for respond t . (Signed ) Peter J . Panuthos Special Trial Judg e Dated : Washington, D .C . May 22, 2009 MAY 2 6 2009 1 3 4 5 6 7 8 10 11 12 13 14 15 16 17 18 19 20 21 22 .23 24 . 25 3 Bench Opinion April 22, 200 9 by Chief Special . Trial Judge Peter J . Panutho s Liend v . Commissioner - Docket No . 18765-08 S The Court has decided to render oral findings o f fact and opinion in this - case and the following represents the-Court ' s oral findings of fact and opinion . The oral findings of fact and opinion shal l not be relied upon as precedent in any other case . This case was heard pursuant to the provisions o f Section 7463 of the Internal Revenue Code in effect a t the time the petition was-filed . The Respondent has determined a deficiency i n Petitioner ' s federal income tax in the amount of . . $2,013 for the taxable year 2006 . After the notice '- of° deficiency was issued, bu t prior to trial , Respondent allowed Petitioner losse s equal to his gambling winnings . Since the gamblin g losses were allowed as an itemized deductio n Petitioner 's standard deduction was disallowed . As a result of this adjustment Respondent ' s position a t trialowas that Petitioner was liable for a deficienc y in the amount of $713 for the taxable year 2006 . The only issue is whether Respondent is correct tha t Petitioner is-still liable for deficiency even afte r the allowance of the gambling losses equal to th e Heritage Reporting ; Corporation (202) 628-4888 1 gambling winnings . 2 The Court finds the following facts based upon 3 the stipulation of facts in the testimony of W' 4 Petitioner . At the time the petition was filedth e Petitioner resided in Minnesota .- Petitioner received gambling income in the amount of $8,013 for the taxable year 2006 , which - was not reported on his 2006 federal income tax return . Petitioner had gambling losses in 2006 which exceeded the amount of his gambling winnings . Petitioner conducted much of his gamblin g Op psi 6 7 1 0 11 12 activity at Mystic Lake Casino -a4 Hotel . Th e 13 gambling consisted of slots and blackjack . Petitioner 14 was also employed full-time as a fork -lift operato r 15 for the United-States-Postal Service . 16 In order to avoid the con frnnr^ t i^ made by 17 Respondent, Petitioner argued that he was engaged in 18 the business of gambling and therefore the losses may 19 be deducted as a business loss and he would not b e 20 . limited to the losses as an itemized deduction . 21 dNhether the taxpayer is engaged in a trade or 22 business and what is the nature of such trade or 23 business are questions of fact, Corbett v . 24 Commissioner , 55 T .C . 884, 887 ( 1971 ) . A taxpayer 25 must pursue an activity with L- nt an f~/J an d Heritage Reporting Corporation (202) 628-4'888 5 1 regularity to be engaged in a trade or business an d 2 its primary purpose for engaging in the activity must 3 be income or profit . An amusement, diversion, hobby 4 or sporadic activity does not qualify . Commissioner 5 v . Groetzinger , 480 U .S . 23, 35-36 (198-7) . We find 6 the Petitioner was not engaged'in the trade o r 7 business of gambling . 8 The only question remaining is whether Respondent 9 properly calculated the deficiency by disallowing th e 10 standard deduction and allowing itemized deductions . . 11 The revised report submitted by Respondent allowe d 12 Petitioner gambling losses in the amount of $8,013 a s 1.3 a Schedule A itemized deduction along with state 14 income tax withholding deduction in the amount o f 15 $3,397 and charitable contributions in the amount of 16 $700 resulting in total itemized deductions o f 17 $12,710 . Because it was more beneficial to Petitione r 18 to claim the itemized deductions on his 2006 return , 19 the standard deduction in the :amount of $7,550 was 20 disallowed as part of the revised report . 21 The Court elicited additional testimony an d 22 information from Petitioner to see whether there migh t 23 be additional itemized deductions ; While it appeared 24 that Petitioner may have several employee busines s t, 25 expenses which might be available, it does not appear Heritage Reporting Corporatio n (202) . 628-4888 1 that such expenses would reduce the deficiency sinc e 2 they would not exceed the two percent threshold of 6 Internal Revenue Code Section 67 . Based upon the above and Respondent's concession and-computation the Court--=holds for*Respondent to-th e extent of the deficiency in the amount of $713 for th e taxable year 2006 . This concludes the Court's oral findings of fact and opinion in this case . (Whereupon, at 1 :19 p .m ., the bench opinion .in the above-entitIed= matter' -was concluded . ) 10 , 11 12 -13 14 15 16 17 18 / / 19 // 2 0 21 22 23 2 4 25 Heritage Reporting Corporation (202) 628-4888