TAX COURT OPINION

Case: Charles Anthony LaBue
Docket Number: 5924-14
Judge: Buch
Opinion Type: bench
Filed: 04/28/2015
Pages: 5

DRB UNITED STATES TAX COURT WASHINGTON, DC 20217 CHARLESANTHONYLABUE, Petitioner, v. ) ) ) ) Docket No. 5924-14. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ORDER Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit with this order to both petitioner and respondent a copy of the pages of the transcript of the trial in this case that contain the oral findings of fact and opinion that was rendered at the trial session at San Francisco, California. In accordance with the oral findings of fact and opinion, decision will be entered for respondent. (Signed) Ronald L. Buch Judge Dated: Washington, D.C. April 28, 2015 SERVED Apr 28 2015 Capital Reporting Company 3 1 Bench Opinion by Judge Ronald L. Buch 2 April 15, 2015 3 Charles Anthony LaBue v. Commissioner 4 5 Docket No. 5924-14 THE COURT: The following represents the 6 Court's oral findings of fact and opinion. The oral 7 8 9 10 11 12 13 14 15 findings of fact and opinion may not be relied upon as precedent in any other case. This opinion is in conformity with Internal Revenue Code section 7459(b) and Rule 152(a) of the Tax Court Rules of Practice & Procedure. Any section references refer to the Internal Revenue Code or the Treasury regulations in effect during the year at issue, and rule references are to Tax Court Rules of Practice & Procedure. The facts in this case are not in dispute. 16 Mr. LaBue engages in on-line wagering. Many of his 17 18 19 20 21 22 23 24 bets are 10 cents and many of his winnings are likewise less than a dollar. On four occasions in 2011, Mr. LaBue won enough to trigger a Form W-2G for his winnings. Those four wins totaled $3225. Mr. LaBue did not report that income. The IRS determined a deficiency related to that omission of income. While residing in 25 California, Mr. LaBue filed a petition. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 Mr. LaBue does not contest the income but he challenges the way wagering winnings and losses are taken into account for tax purposes for the nonprofessional gambler, and no one contends that 5 Mr. LaBue is a professional gambler. 6 7 8 9 10 11 We note as an aside that Mr. LaBue's own records show what appear to be over 7,000 individual wagers totaling $28,802 with a total payoff of $21,518. This yields an aggregate loss of $7,281. This is for one gambling website. Although Mr. LaBue discussed other gambling 12 websites, there is no evidence of any additional 13 14 15 16 17 18 19 20 21 22 23 wagers or payoffs. Neither party addressed the wagering income beyond the $3225 that was reported on Forms W-2G or the gross losses so we will not address those further. Discussion: Mr. LaBue does not dispute the increased income of $3225. He merely disagrees with the way wagering income and losses are taken into account for the nonprofessional gambler. He claims that his gambling losses are less than the standard deduction and that he must take into account his 24 wagering income while effectively being denied the 25 losses that he also incurred from wagering. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 2 3 4 5 6 7 8 9 10 11 12 13 We have repeatedly addressed the manner in which such items are taken into account for tax purposes. In Jackson v. Commissioner, TC Memo 2007-373, we stated, "In the case of a taxpayer not engaged in the trade or business of gambling, gambling losses are allowable as an itemized deduction, but only to the extent of gains from such transactions." We cited IRC section 165(d) and McClanahan v. United States, 292 F.2d 630, n. 1 (5th Cir. 1961). That case in turn cited Winkler v. United States, 230 F.2d 766 (1st Cir. 1956). In arguing, Mister -- in arguing his case, 14 Mr. LaBue noted that some of the older cases cite 15 16 17 code sections that no longer seem to be in effect. That is because of the reorganization of the Internal Revenue Code in 1986. We direct his attention to the 18 more recent case of not only Jackson, cited above, 19 20 21 22 23 24 but also Shollenberger v. Commissioner, TC Memo 2009-306. Current law is clear that for the nonprofessional, wagering income is taken into account as part of gross income. Wagering losses are taken into account as itemized deductions. If 25 Mr. LaBue seeks a change in the manner in which these 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 items are taken into account, it is an issue to be taken up with Congress. The IRS applied the law as 3 written. Decision will be entered for Respondent. With that, Mr. Andrews, I believe this session is adjourned. (Whereupon, at 9:15 a.m., the above- entitled matter was concluded.) 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com