                        T.C. Memo. 1997-81



                      UNITED STATES TAX COURT



                  JOHN DAVID ZIELONKA, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 20037-95.               Filed February 18, 1997.



     John David Zielonka, pro se.

     Ladd C. Brown, Jr., for respondent.


             MEMORANDUM FINDINGS OF FACT AND OPINION


     DAWSON, Judge:   This case was assigned to Special Trial

Judge Robert N. Armen, Jr., pursuant to the provisions of section

7443A(b)(4) of the Internal Revenue Code of 1986, as amended, and
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Rules 180, 181, and 183.1    The Court agrees with and adopts the

Opinion of the Special Trial Judge, which is set forth below.

                OPINION OF THE SPECIAL TRIAL JUDGE

     ARMEN, Special Trial Judge:     Respondent determined

deficiencies in petitioner's Federal income taxes for the taxable

years 1989 and 1992, as well as additions to tax and penalties

for negligence, as follows:

                              Addition to Tax      Penalty
     Year     Deficiency      Sec. 6651(a)(1)    Sec. 6662(a)

     1989    $5,422               $1,263          $1,084
     1992    39,312                9,268           7,862


     The issues for decision are:    (1) Whether petitioner is

entitled to gambling losses in the amounts of $29,978 and

$140,830 for 1989 and 1992, respectively; (2) whether petitioner

is liable pursuant to section 6651(a)(1) for additions to tax for

failure to timely file his income tax returns for 1989 and 1992;

and (3) whether petitioner is liable pursuant to section 6662(a)

for accuracy-related penalties for negligence for 1989 and 1992.

                           FINDINGS OF FACT

     Some of the facts have been stipulated, and they are so

found.   Petitioner resided in Miami Beach, Florida, at the time

that his petition was filed with the Court.

     1
       Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the taxable years in
issue, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
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     1.   General Background

     Petitioner began gambling in 1974.   Sometime thereafter,

petitioner developed into a compulsive gambler.

     During 1989 and 1992, the taxable years in issue, petitioner

attended the dog and horse racing tracks on a regular and

frequent basis.   During those years, petitioner gambled on a

full-time basis and was not otherwise gainfully employed.

     At trial, petitioner did not introduce any books or records

reflecting his gambling winnings and losses.   Petitioner does not

remember whether he maintained books or records reflecting his

gambling winnings and losses for 1989.    Petitioner maintained a

gambling log for 1992; however, such log was not accurate

because, in petitioner's opinion, it was "time-consuming to * * *

make it precise".

2.   The Income Tax Returns

     On his 1989 and 1992 Federal income returns, petitioner

identified his occupation as a "professional gambler" and

reported gambling winnings in the amounts of $29,978 and

$140,830, respectively.   Of the $140,830 reported as gambling

winnings on the 1992 return, $90,830 represent winnings for which

Forms W-2G were issued.   The remaining $50,000 represent

petitioner's estimate of his winnings for that year.   Although

the record is not perfectly clear, it would appear that the
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gambling winnings reported on the 1989 return represent only

winnings for which Forms W-2G were issued.

     On Schedule A of his 1989 and 1992 returns, petitioner

deducted gambling losses in the amount of his reported winnings;

i.e., $29,978 and $140,830, respectively.

     Petitioner filed his income tax returns for 1989 and 1992 in

April 1994.

3.   The Notice of Deficiency

     In the notice of deficiency, respondent determined

deficiencies in petitioner's Federal income taxes in the amounts

of $5,422 and $39,312 for 1989 and 1992, respectively.

Specifically, respondent determined that petitioner failed to

substantiate his gambling losses.    Accordingly, respondent

disallowed the gambling loss deductions claimed by petitioner on

Schedule A of his 1989 and 1992 returns.

     In the notice of deficiency, respondent also determined

that, for 1989 and 1992, petitioner was liable for (1) additions

to tax under section 6651(a)(1) for failure to timely file income

tax returns and (2) accuracy-related penalties under section

6662(a) for negligence.

                                OPINION

1.   Wagering Losses

     Section 165(d) provides for a deduction for losses from

gambling transactions to the extent of gains from such
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transactions.    Sec. 165(d); sec 1.165-10, Income Tax Regs.

Respondent determined that petitioner failed to substantiate

deductions that he claimed for gambling losses on his 1989 and

1992 income tax returns.

     Petitioner bears the burden of proving error in respondent's

determination.    Rule 142(a); INDOPCO, Inc. v. Commissioner, 503

U.S. 79, 84 (1992); Welch v. Helvering, 290 U.S. 111, 115 (1933).

Specifically, petitioner bears the burden of establishing that he

sustained the gambling losses that he claimed on his 1989 and

1992 income tax returns.    Rule 142(a); Schooler v. Commissioner,

68 T.C. 867, 869 (1977).    The issue is factual and must be

decided on the evidence presented.      Green v. Commissioner, 66

T.C. 538, 544 (1976).

     Section 6001 requires taxpayers to keep books and records

adequate to substantiate their income and deductions.     See sec.

1.6001-1(a), Income Tax Regs.

     If the trial record provides sufficient evidence that a

taxpayer has incurred a deductible expense, but the taxpayer is

unable to adequately substantiate the amount of the deduction to

which he or she is otherwise entitled, the Court may, under

certain circumstances, estimate the amount of such expense and

allow the deduction to that extent.     Cohan v. Commissioner, 39

F.2d 540, 543-544 (2d Cir. 1930).    However, in order for the

Court to estimate the amount of an expense, we must have some
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basis upon which an estimate may be made.    Vanicek v.

Commissioner, 85 T.C. 731, 743 (1985).   Without such a basis, any

allowance would amount to unguided largesse.    Williams v. United

States, 245 F.2d 559, 560 (5th Cir. 1957).

     At trial, petitioner admitted that he could not remember

whether he maintained contemporaneous records of his gambling

activity for 1989.   At trial, petitioner also admitted that

although he maintained records of his gambling activity for 1992,

such records were inaccurate.   In any event, petitioner did not

provide the Court with any records or documentation whatsoever

regarding his gambling activity for either 1989 or 1992.     The

only evidence presented by petitioner to support the deductions

for gambling losses was petitioner's own testimony.

     We recognize that petitioner must have sustained some losses

in view of his substantial gambling activity.   However, we are

reminded of petitioner's testimony that petitioner estimated a

portion of the gambling winnings reported on his 1992 return.

Moreover, the gambling winnings that were reported on the 1989

return appear to represent only those winnings for which Forms W-

2G were issued.   Thus, we have no assurance that petitioner

reported all of his gambling winnings.   This uncertainty,

together with the complete absence of any documentation or other

credible corroborating evidence concerning petitioner's gambling

activity, precludes us from estimating petitioner's alleged
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losses under the rule of Cohan v. Commissioner, supra.

Accordingly, we hold that petitioner has failed to carry his

burden of proof.    Petitioner is therefore not entitled to deduct

any gambling losses for 1989 and 1992.2

2.   Section 6651(a)(1) Addition to Tax

     The addition to tax under section 6651(a)(1) is imposed on a

taxpayer who fails to file an income tax return in a timely

fashion, unless the taxpayer's failure is due to reasonable cause

and not willful neglect.

     Petitioner bears the burden of proving that his failure to

timely file is due to reasonable cause and not due to willful

neglect.    Rule 142(a); Abramo v. Commissioner, 78 T.C. 154, 163

(1982).

     Petitioner's income tax return for 1989 was due on Monday,

April 16, 1990, and petitioner's return for 1992 was due on April

15, 1993.    Secs. 6072(a), 7503.   However, petitioner's returns

for 1989 and 1992 were filed in April 1994.     Petitioner offered

no persuasive evidence indicative of reasonable cause to file

late.    This Court has consistently held that a taxpayer's failure


     2
       Although petitioner reported his gambling losses on
Schedule A rather than on Schedule C, he considered himself to be
a professional gambler. In contrast, respondent considers
petitioner to be an amateur gambler. However, because of our
holding that petitioner is not entitled to deduct any gambling
losses for 1989 and 1992, we need not decide petitioner's status
as a professional or amateur gambler. See Groetzinger v.
Commissioner, 480 U.S. 23 (1987).
                                 - 8 -


to file a timely return because the taxpayer thought that no

taxes were due does not constitute reasonable cause within the

meaning of section 6651(a)(1).    See Colbert v. Commissioner, T.C.

Memo. 1992-30, and cases cited therein.      Accordingly, we hold

that petitioner is liable for the additions to tax under section

6651(a)(1) for 1989 and 1992.

3.   Section 6662(a) Accuracy-related Penalty

     Section 6662(a) provides that if any portion of an

underpayment of tax is attributable to negligence or disregard of

rules or regulations, then there shall be added to the tax an

amount equal to 20 percent of the amount of the underpayment

which is so attributable.   The term "negligence" includes any

failure to make a reasonable attempt to comply with the statute,

and the term "disregard" includes any careless, reckless, or

intentional disregard.   Sec. 6662(c).

     Petitioner bears the burden of proving that he is not liable

for the accuracy-related penalty.    Rule 142(a); INDOPCO, Inc. v.

Commissioner, supra; Welch v. Helvering, supra.

     Petitioner did not address the penalty for negligence at

trial and therefore failed to carry his burden of proof.      In any

event, we note that petitioner's failure to maintain accurate and

complete records of his gambling activity would suffice to

sustain respondent's determination.      Accordingly, we hold that
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petitioner is liable for accuracy-related penalties for 1989 and

1992.

4.   Conclusion

      To give effect to our disposition of the disputed issues,



                                       Decision will be entered

                               for respondent.
