The record reflects no factual disputes of consequence. During the years 1985 and 1986 Allen worked as a blackjack dealer at the Imperial Palace Casino in Las Vegas, Nevada. The Internal Revenue Service selected for audit his tax returns for those years. Allen could not substantiate gambling losses and the audit uncovered unreported income from tokes which were received in the course of his employment at the Imperial Palace. Casino dealers traditionally receive tokes from patrons playing at their tables.
Tokes take the form of bets placed by the patron for the dealer's benefit.
1 Dealers typically pool and split the tokes received on each shift. Indeed, casino policy prudently prohibits dealers from performing favors of any kind for any patron, regardless of gratuities given or expected. Upon the completion of its audit the IRS gave Allen a statutory deficiency notice. Allen opted against challenging the deficiency notice before the Tax Court . . . . The IRS then assessed and Allen paid additional tax due, interest, and penalties . . . .