Commissioner v. Groetzinger

480 U.S. 23 (1987)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

P had worked for 20 years in sales and market research for an Illinois manufacturer when his position was terminated in February 1978. During the remainder of that year, P busied himself with parimutuel wagering, primarily on greyhound races. He gambled at tracks in Florida and Colorado. He went to the track 6 days a week for 48 weeks in 1978. He spent a substantial amount of time studying racing forms, programs, and other materials. He devoted from 60 to 80 hours each week to these gambling-related endeavors. He never placed bets on behalf of any other person, or sold tips, or collected commissions for placing bets or functioned as a bookmaker. He gambled solely for his own account. He had no other profession or type of employment. P had worked for 20 years in sales and market research for an Illinois manufacturer when his position was terminated in February 1978. During the remainder of that year, P busied himself with parimutuel wagering, primarily on greyhound races. He gambled at tracks in Florida and Colorado. He went to the track 6 days a week for 48 weeks in 1978. He spent a substantial amount of time studying racing forms, programs, and other materials. He devoted from 60 to 80 hours each week to these gambling-related endeavors. He never placed bets on behalf of any other person, or sold tips, or collected commissions for placing bets or functioned as a bookmaker. He gambled solely for his own account. He had no other profession or type of employment. In 1978, he had gross winnings of $70,000, but he bet $72,032; he thus realized a net gambling loss for the year of $2,032. P reported as income only the $6,498 realized from nongambling sources. He did not report any gambling winnings or deduct any gambling losses. He did not itemize deductions. Instead, he computed his tax liability from the tax tables. D discovered the gambling and determined that a portion of P's $ 70,000 gambling-loss deduction was an item of tax preference and operated to subject him to the minimum tax under § 56(a) of the Code, 26 U. S. C. § 56(a) (1976 ed.). This resulted in a total asserted tax deficiency of $2,522 for respondent for 1978. The Tax Court held that P was in the trade or business of gambling, and that, as a consequence, no part of his gambling losses constituted an item of tax preference in determining any minimum tax for 1978. D appealed, and the Seventh Circuit affirmed. The Supreme Court granted certiorari.