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United States Tax Court Opinion 2009-144

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UNITED STATES TAX COURT Opinion 2009-144
JANELLO S. DUNGCA AND MARIA C. GUTIERREZ, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 17802-08S. Filed September 17, 2009.

Janello S. Dungca and Maria C. Gutierrez, pro sese.
Matthew D. Carlson, for respondent.

Introduction
This case was heard pursuant to the provisions of section 7463 of the Internal Revenue Code in effect when the petition was filed. The respondent determined a $33,091 income tax deficiency and a $6,618 section 6662(a) accuracy-related penalty for the petitioners’ 2005 tax year. Issues presented for consideration are: (1) Whether petitioners are entitled to deduct gambling losses; and (2) whether petitioners are liable for a section 6662(a) accuracy-related penalty.

Background
During 2005, petitioner Janello S. Dungca (Mr. Dungca) was employed by a consulting company in Pittsburgh, Pennsylvania. His consulting assignment from January 1 through July 30, 2005, was at the Mayo Clinic in Rochester, Minnesota. Approximately every other weekend during that period, the petitioners visited a gambling establishment named Canterbury Park that offered wagering on horse racing. Mr. Dungca was an inveterate gambler, and since 1991 he had spent a good amount of his nonworking time gambling. Mr. Dungca would retain betting slips, receipts, and records of cash withdrawals, and at the end of each day he would record the day’s bets, winnings, and cash withdrawals (cash in and out) in a journal. The journal entries reflected the net cash flow for the day, due to the large numbers of bets made each day. During 2005 Mr. Dungca received Forms W-2G, Certain Gambling Winnings, reflecting total gambling winnings of $78,262. For their 2005 tax year petitioners reported gambling winnings of $78,437 and corresponding gambling losses of $78,437, thereby showing no net gambling...

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