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U.S. Tax Court: Gambling pro can deduct losses

A taxpayer who read a few books on gambling and had reasons for gambling on certain days or at certain hours qualified as a professional gambler and could deduct her losses against her gambling income, the U.S. Tax Court has ruled.

A retired couple sought to deduct the wife’s losses playing slot machines at a local casino.

The wife testified that she had “on the job” training as a professional gambler, beginning in 1987; that she read a couple of books about slot machine strategy; and that she had reasons for gambling on particular days and during particular hours.

The wife claimed she was a professional gambler and sought to deduct gambling losses as “business” losses for 2004 and 2005.

The court held that she was entitled to deduct her gambling losses against her gambling winnings.

“Bearing in mind that the expectation of profit is a matter of subjective intent and need not be reasonable … we believe that the preponderance of the evidence favors [the taxpayer’s] claim that during 2004 and 2005 she pursued gambling with a profit objective. … [The taxpayer] was a professional gambler during 2004 and 2005 and may deduct her gambling losses to the extent of her gambling winnings on Schedule C,” the court said.

The case is Chow v. IRS, No. 18774-08, March 18.