Petitioner Joan Mertz worked approximately 10 hours per week. In addition to running the fast food franchises in 1992 and 1993, Petitioners played slot machines. However, Petitioners presented no detailed records to support the hours purportedly spent gambling. In 1993, Petitioners purportedly gambled in Michigan a total of 22 hours per day for approximately 220 days and reported zero gambling winnings. So Petitioners claimed to be full time gamblers, gambling 50-60 hours per week each, in a business that, in its primary state of operations, grossed zero for 1993, its second year of operations.
Petitioners are successful, astute business people.
Petitioners' original Federal tax returns for 1992 and 1993 showed their gambling activities as non-business. Their CPA of eighteen years who is on the federal taxation committee of the Michigan Association of CPAs prepared the returns. Then the Michigan returns were amended. This made the gambling losses deductible to the extent of gambling winnings, thus eliminating Petitioners' Michigan tax liability. Also, Petitioners' arguments that slot playing requires skill were unpersuasive.