from last year, in Gagliardi v. Commissioner (Tax Court=):
Respondent attempted to discredit Dr. Pike by claiming her definition of “gambler’s fallacy” was incorrect. Respondent relies on a definition of “gambler’s fallacy” he obtained from Wikipedia. Respondent did not call any witness, or expert witness, to counter Dr. Pike’s conclusions. Respondent’s reliance on a definition of “gambler’s fallacy” found in Wikipedia[18] is not persuasive. Dr. Pike and Mr. Nicely, a second expert witness whose testimony and opinions are discussed in greater detail infra, credibly explained that there is a difference in the definition of “gambler’s fallacy” depending on the field of study -- e.g., psychology versus mathematics. We find Dr. Pike to be credible and rely on her expert opinion.
[Footnote 18:] Although we conclude that the information respondent obtained from Wikipedia was not wholly reliable and not persuasive in the instant case, we make no findings regarding the reliability, persuasiveness, or use of Wikipedia in general.
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Too bad they kept good records about his winning the lottery. Otherwise, he would have a slam dunk case against paying his taxes on those winnings. The odds against winning the lottery are just as astronomical.
What the government is trying to do here is pathetic. The guy's gambling addiction is pathetic. The pro-gambling law that allows people to deduct their losses to the extent of their winnings is also pathetic. But it's all pretty amusing as well.
Huh? This makes no sense. Would you apply the same logic to stocks, where losses couldn't be applied against gains?
In both cases, I think its a pretty stupid compromise. If trading stocks or gambling is a worthwhile activity, then losses should be fully deductible, not with the limitation to winnings, or with the absurd carry-forward. Also, suppose you are engaged in a long term activity like playing the lottery. In years one through 49, you lose 5 dollars per week, every week. Then in yard 50, you hit the jackpot in your first week, and stop playing. None of your losses are deductible.
Again, if the activity is not worthwhile, then losses or expenses should not be deductible. I know crack dealers are supposed to report their incomes, but do they get to deduct losses for when their stuff is seized? or expense the cost of ammunition used in a drive-by shooting? The government really needs to decide how it feels about gambling, and until it does, any "policies" it has on the matter are pretty pathetic.
The issue is that gambling is both a means of recreation and a means of making money. It may be difficult or impossible to determine in the case of a particular taxpayer which purpose predominates. In order to accurately reflect net gambling winnings (and ours is a net income tax), it is proper to deduct losses incurred earning those winnings.
Since gambling has a fundamental recreational element, however, it is not proper to use net gambling losses to shelter unrelated income.
It has nothing to do with whether gambling is "worthwhile". Compare the gambling loss provisions with the hobby loss provisions, which are very similar, and for similar reasons. Nobody is suggesting that hobbies aren't "worthwhile"--it simply isn't appropriate to shelter unrelated income with losses from quasi-recreational activities.
Perhaps they weren't available?
* At least they didn't resort to Big Jule. I mean, sure, he'll get whatever result you want, but there have been rumors....
Thus, as a matter of tax law, owning a home is more worthwhile than renting. Running a business is more worthwhile than pursuing a hobby, even if there is no substantive difference between two people doing the same activity. Giving to a charity is more worthwhile than giving to a specific individual, even if he desperately needs the money.
When you talk about whether something is "appropriate" or not, it seems to me that its just an obfuscation. What is the reason that business deductibility is favored, but not recreational deductions, especially in areas where its so easy for a person to convert their activities into a business? For me, its not enough to simply pigeonhole one as recreational and the other as business. The tax law encourages one activity more than the other, and I think it should do so because it thinks one activity is better than the other. (Actually, I would rather have a system that didn't make any such preferences. But, as long as it does, I would like the preferences to be well-reasoned.)
Also, does the net income approach apply to illegal gains and losses?
Don't you just love tax law?
Cheers,
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