Opinion ID: 1773127
Heading Depth: 1
Heading Rank: 2

Heading: Gambling Losses

Text: Gene next contends that if gambling winnings are to be included as income, then gambling losses should be credited against those winnings up to the amount of the winnings, as provided in the Internal Revenue Code. Had the chancery court permitted a credit of gambling losses against gambling winnings for purposes of determining income, Gene argues, his disposable income would have been significantly reduced. Net Gain Due Year to Gambling 1995 Winnings: $ 15,900.00 Losses: Net Gain: $ 1,265.00 1996 Winnings: $ 57,800.00 Losses: Net Gain: $ 12,361.00 1997 Winnings: $ 20,900.00 Losses: ___________ Net Gain: $ .00 Bernice counters that the Administrative Order does not provide for that but rather limits deductions from income under § II to the following categories: (1) federal and state income tax; (2) withholding for Social Security, medicare, and railroad retirement; (3) medical insurance paid for dependant children; and (4) presently paid child support for other dependent children by court order. Gene's argument has merit. As was the case for determining income for childsupport purposes, we do not view this list of deductions in the Administrative Order as exhaustive or exclusive. See, e.g., Masterson v. Stambuck, supra . We further observe that the Administrative Order provides as follows with regard to self-employed persons: For self-employed payors, support shall be calculated based on last year's federal and state income tax returns and the quarterly estimates for the current year. Also the court shall consider the amount the payor is capable of earning or a net worth approach based on property, lifestyle, etc. Administrative Orders of the Supreme Court, No. 10, § IIIc. This subsection brings into play consideration of state and federal tax returns for self-employed individuals, which would include Gene's handling of his gambling winnings and losses in his 1040 tax returns for 1995, 1996, and 1997. In determining net gambling income for federal income tax purposes, the Internal Revenue Code provides that gambling losses can be deducted up to the amount of gambling winnings. See 26 U.S.C.A. § 165(d). The federal income tax treatment of gambling gains and losses seems appropriate for child-support calculations in that our goal should be to decide what constitutes disposable income of the support obligor. In Stepp v. Gray, 58 Ark. App. 229, 947 S.W.2d 798 (1997), our court of appeals considered whether a depreciation deduction against income from rental properties should be denied in determining the true disposable income of the childsupport payor. In doing so, the appellate court observed: Surely, determining the expendable income of a child-support payor is still the ultimate task of the chancellor following the adoption of the child-support guidelines in 1989. 58 Ark.App. at 236, 947 S.W.2d at 801. We agree with the court of appeals that determining expendable income is the ultimate objective of our chancery courts. For purposes of the instant case, the true expendable or disposable income can only be arrived at by crediting gambling losses only to the extent of winnings. We reverse the chancery court on this point and remand for further proceedings to prove gambling losses for the calendar years in question. In this regard, we note that while Gene's 1040 tax returns may be a starting point, documentary evidence must be presented to the chancery court to prove his gambling losses.