                                                                           FILED
                            NOT FOR PUBLICATION                             SEP 21 2012

                                                                        MOLLY C. DWYER, CLERK
                     UNITED STATES COURT OF APPEALS                      U .S. C O U R T OF APPE ALS




                            FOR THE NINTH CIRCUIT



PHU M. AU; YVONNE D. AU,                         No. 11-70270

               Petitioners - Appellants,         Tax Ct. No. 16366-09

  v.
                                                 MEMORANDUM *
COMMISSIONER OF INTERNAL
REVENUE,

               Respondent - Appellee.



                            Appeal from a Decision of the
                              United States Tax Court

                          Submitted September 10, 2012 **

Before:        WARDLAW, CLIFTON, and N.R. SMITH, Circuit Judges.

       Phu M. and Yvonne D. Au appeal pro se from the Tax Court’s decision,

following a bench trial, upholding the Commissioner of Internal Revenue’s

deficiency and additions for tax year 2006. We have jurisdiction under 26 U.S.C.




          *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
          **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
§ 7482(a). We review de novo the Tax Court’s legal conclusions, and for clear

error its factual findings. Johanson v. Comm’r, 541 F.3d 973, 976 (9th Cir. 2008).

We affirm.

      The Tax Court properly upheld the tax deficiency because the Aus’

gambling losses could only be deducted from gambling winnings. See 26 U.S.C.

§ 165(d) (“[l]osses from wagering transactions shall be allowed only to the extent

of gains from such transactions”)

      The Tax Court did not clearly err by finding that the Aus were subject to the

accuracy-related penalty for negligence under 26 U.S.C. § 6662(b) where they

made no inquiry to confirm that their substantial deductions were allowable. See

Sparkman v. Comm’r, 509 F.3d 1149, 1161 (9th Cir. 2007) (“The Tax Court’s

determination on a negligence penalty is reviewed for clear error.”).

      The Tax Court did not abuse its discretion in declining to appoint counsel

where the Aus did not request counsel until the day of the trial and failed to show

exceptional circumstances. See Palmer v. Valdez, 560 F.3d 965, 970 (9th Cir.

2009) (standard of review and exceptional circumstances requirement).

      The Aus’ contention that they were forced to sign stipulations prior to trial is

not supported by the record.

      AFFIRMED.


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