                          T.C. Memo. 2000-168



                       UNITED STATES TAX COURT


                 ROGER JOHN TORPIE, JR., Petitioner v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent


     Docket No. 858-99.                          Filed May 22, 2000.


     Roger John Torpie, Jr., pro se.

     Richard J. Wright, for respondent.



                          MEMORANDUM OPINION

     POWELL, Special Trial Judge:     Respondent determined a

deficiency in petitioner's 1996 Federal income tax of $238.     The

issue is whether petitioner is entitled to a gambling loss

deduction.    Petitioner resided in Dallas, Texas, when the

petition in this case was filed.

     The facts are not in dispute and may be summarized as

follows.   During 1996, petitioner won $858 in a lottery that he

reported on his 1996 Federal income tax return.    While the exact
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cumulative amount petitioner lost in gambling during 1996 is

unclear, the parties seem to agree that he lost more than he won.

     On his 1996 return petitioner deducted $858 in determining

his adjusted gross income.   Petitioner did not itemize deductions

and claimed the so-called standard deduction.    In the notice of

deficiency, respondent determined that the $858 deduction was not

allowable.

                             Discussion

     Section 61(a)1 defines gross income to mean all income from

whatever source derived.   Lottery winnings are includable in

gross income.   See Paul v. Commissioner, T.C. Memo. 1992-582.

Petitioner admits that he won $858.    As we understand,

petitioner's position is that he sustained a net loss from his

gambling activities during 1996, and, therefore, he should be

able to deduct the losses that he incurred in determining the

amount of gambling income that he received.

     Respondent argues that, even if the Court finds that

petitioner sustained gambling losses during 1996, which we do,

the deductible amount of such gambling losses would be limited to

the amount of the gambling winnings reported.    Respondent further

argues that, even if petitioner were entitled to a Schedule A

itemized deduction for any such gambling loss, the claimed



     1
          Unless otherwise indicated, section references are to
the Internal Revenue Code in effect for the year in issue.
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standard deduction for 1996 of $3,000, see sec. 63(c)(2)(C),

would exceed the maximum gambling loss deduction.

     In the case of an individual, section 62(a) defines adjusted

gross income as gross income less certain deductions, including

deductions attributable to a trade or business carried on by the

taxpayer.   See sec. 62(a)(1).   If petitioner's gambling activity

constituted a trade or business, his gambling losses would be

deductible from gross income in arriving at adjusted gross income

on Schedule C, Profit or Loss from Business.    See id.   If

petitioner's gambling activity did not constitute a trade or

business, his gambling losses would be deductible as an itemized

deduction in arriving at taxable income on Schedule A, Itemized

Deductions.   See sec. 63(a).    But, regardless whether or not the

activity constituted a trade or business, section 165(d) provides

that “Losses from wagering transactions shall be allowed only to

the extent of the gains from such transactions.”     See also sec.

1.165-10, Income Tax Regs.

     Petitioner has not argued, nor do we find, that he was in a

trade or business of gambling.    To be engaged in a trade or

business, an individual must be involved in the activity with

continuity and regularity, and the primary purpose for engaging

in the activity must be for income or profit.    See Commissioner

v. Groetzinger, 480 U.S. 23, 35 (1987).     “A sporadic activity, a

hobby, or an amusement diversion does not qualify [as a trade or
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business].”   Id. at 35.    Petitioner's gambling activities fall in

the latter categories.     His alleged gambling losses, therefore,

are deductible only as a Schedule A itemized deduction.       See

Heidelberg v. Commissioner, T.C. Memo. 1977-133.

     In order to claim any Schedule A itemized deduction,

petitioner would have to forgo the standard deduction of $3,000.

See sec. 63(a) and (b).     Since he claims no itemized deductions,

other than the gambling loss deduction, petitioner’s total amount

of itemized deductions (consisting solely of the gambling loss

deduction) is limited by section 165(d) to the amount of the

gambling income ($858).     Under the statutory provisions,

petitioner’s most favorable tax treatment in this case is,

therefore, the one determined by respondent in the statutory

notice of deficiency.

     Petitioner contends that Congress could not have intended

this result because it discriminates against low-income taxpayers

who rarely have sufficient deductions to itemize.       This result,

however, is directed by the literal language of the statutes

involved as enacted by Congress, and we are bound by that

language.   The request for relief that petitioner seeks must be

addressed to Congress and not to the courts.

     To reflect the foregoing,

                                         Decision will be entered

                                 for respondent.
