That’s Fortunato Gonzalez and Maria C. Gonzalez, petitioners in T. C. Sum. Op. 2012-78, filed 8/6/12, a “not-for-nuthin’”, with Chief Special Trial Judge Panuthos rolling the dice.
Fortunato wasn’t, and Maria didn’t do better. They were gamblers; amateurs, not pros, and at the close of play they were down big time, they claimed. IRS didn’t think so, brandishing W-2Gs showing $20K in winnings from a casino, that never made it onto Fortunato’s and Maria’s 1040.
Fortunato and Maria showed on the trial they cashed checks near the weekends, when they played, and didn’t make much money from anything else. They didn’t have losing betting slips or players’ club cards, or anything but their bank statements and the canceled checks they cashed.
CSTJ Panuthos: “Petitioners attempted to substantiate gambling losses, relying on (1) their general testimony that they lost more money than they won, (2) checks that were cashed regularly so that funds would be available at the casino, and (3) the theory that all gamblers lose money.” T.C. Sum. Op. 2012-78, at p. 5.
See my blogpost “I’m a Rambler, I’m a Gambler”, 7/18/11: “Moore said that he called the IRS in 2004 to ask how to keep track of his gambling losses and that the IRS told him he could use bank statements. Moore claimed to have kept bank statements as records of his gambling transactions, but he did not present any bank statements as evidence.” 2011 T.C. Mem. 173, footnote 3, at pp. 3-4.”
But Faustino and Maria got it right. They had the bank statements and their canceled checks, and played show-and-tell at trial. So CSTJ Panuthos gives them a Cohan approximation, and sends them off for a Rule 155.
Chief STJ Panuthos: “Petitioners wrote checks to cash at least once a month for most of the year in issue, and most of the checks were negotiated near weekends and holidays. We are satisfied that at least some of these funds and some of the winnings were used to engage in gambling activities. Taking into account the credible testimony of petitioners, the fact that gambling winnings were used to engage in additional gambling activity, the cashing of checks on the weekends, and the fact that petitioners’ disposable income from other sources was otherwise limited, and using our best judgment to reasonably estimate the amount of gambling losses, we allow petitioners a gambling loss of $15,000. Accordingly, petitioners may deduct $15,000 of gambling losses against the $20,700 of gambling winnings.” T.C. Sum. Op. 2012-78, at pp. 6-7.
Better than nothing, but keep good records, gamblers. They might help you win even when you don’t win.