                         T.C. Memo. 2011-77



                      UNITED STATES TAX COURT



                  WILLIAM JONES, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 5776-09.                Filed April 4, 2011.



     Donald J. Mock, for petitioner.

     Angela B. Friedman, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     HAINES, Judge:   Respondent determined a deficiency in

petitioner’s 2006 Federal income tax of $2,885.1   The issue for




     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code of 1986, as amended, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
Amounts are rounded to the nearest dollar.
                                 -2-

decision after concessions2 is whether petitioner is entitled to

deduct gambling losses for 2006.

                         FINDINGS OF FACT

     Some of the facts have been stipulated and are so found.

The stipulation of facts and the attached exhibits are

incorporated herein by this reference.   At the time petitioner

filed his petition, he resided in Chicago, Illinois.

     Petitioner is a recreational gambler who played slot

machines regularly in 2006 at various Chicagoland area casinos.

Petitioner had income from gambling winnings in 2006 of $7,000.

Petitioner kept no diary, log, or record of any kind of his

gambling losses.   Petitioner used a casino members club card on

rare occasions, but because he seldom used such a card, none of

the casinos petitioner claims to have frequented has any record

of his gambling winnings or losses.

     At trial, petitioner presented his bank account records,

which indicate that he had a balance of $7,531 on December 31,

2005, and a balance of $946.64 on December 31, 2006. Petitioner

testified that most of the money withdrawn from his bank account

in 2006 was spent on gambling.


     2
      The parties’ stipulation of settled issues states: (1)
Petitioner had income from wages in 2006 of $23,204; (2)
petitioner is entitled to a standard deduction; (3) petitioner is
entitled to a single personal exemption; and (4) petitioner is
liable for additions to tax pursuant to secs. 6651(a)(1) and (2)
and 6654. The amount of each addition is computational and
depends on the resolution of this case.
                                 -3-

     Petitioner failed to file Form 1040, U.S. Individual Income

Tax Return, for 2006.   Respondent prepared a substitute for

return under section 6020(b), which gave rise to the notice of

deficiency.   Petitioner filed a timely petition, and a trial was

held on March 5, 2010, in Chicago, Illinois.

                               OPINION

     Gross income includes all income from whatever source

derived, including gambling.   See sec. 61; McClanahan v. United

States, 292 F.2d 630, 631-632 (5th Cir. 1961).   In the case of a

taxpayer not engaged in the trade or business of gambling,

gambling losses are allowable as an itemized deduction, but only

to the extent of gains from such transactions.   Sec. 165(d);

McClanahan v. United States, supra at 632 n.1 (citing Winkler v.

United States, 230 F.2d 766 (1st Cir. 1956)).    In order to

establish entitlement to a deduction for gambling losses

petitioner must prove the losses sustained during the taxable

year.   Mack v. Commissioner, 429 F.2d 182 (6th Cir. 1970), affg.

T.C. Memo. 1969-26; Stein v. Commissioner, 322 F.2d 78 (5th Cir.

1963), affg. T.C. Memo. 1962-19.

     Petitioner failed to present credible evidence of gambling

losses in 2006.   Petitioner did not maintain a diary or any other

contemporaneous record reflecting his gambling losses.   In fact,

petitioner has not been able to assert with any specificity the

amount of his gambling losses in 2006.   At trial, petitioner
                                -4-

attempted to substantiate gambling losses, relying only on the

theory that his losses must have approximately equaled the

difference between his beginning-of-year and end-of-year bank

account balances.    We conclude that petitioner has failed to

satisfy his burden of substantiating his losses.

     As a general rule, if the trial record provides sufficient

evidence that the taxpayer has incurred a deductible expense, but

the taxpayer is unable to substantiate adequately the precise

amount of the deduction to which he or she is otherwise entitled,

the Court may estimate the amount of the deductible expense and

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

F.2d 540, 543-544 (2d Cir. 1930); Vanicek v. Commissioner, 85

T.C. 731, 742-743 (1985); Sanford v. Commissioner, 50 T.C. 823,

827-828 (1968), affd. per curiam 412 F.2d 201 (2d Cir. 1969);

sec. 1.274-5T(a), Temporary Income Tax Regs., 50 Fed. Reg. 46014

(Nov. 6, 1985). In these instances the Court is permitted to make

as close an approximation of the allowable expense as it can,

bearing heavily against the taxpayer whose inexactitude is of his

or her own making.   Cohan v. Commissioner, supra at 544.

However, in order for the Court to estimate the amount of an

expense, the Court must have some basis upon which an estimate

may be made.   Vanicek v. Commissioner, supra at 742-743.    Without

such a basis, any allowance would amount to unguided largesse.

Williams v. United States, 245 F.2d 559, 560-561 (5th Cir. 1957).
                                 -5-

     The record provides no satisfactory basis for estimating

petitioner’s gambling losses.    See Stein v. Commissioner, supra.

Unlike taxpayers in cases such as Doffin v. Commissioner, T.C.

Memo. 1991-114, where evidence of the taxpayer’s lifestyle and

financial position allowed this Court to approximate

unsubstantiated gambling losses, petitioner has failed to produce

any evidence to corroborate his story.     Consequently, the Court

will not apply the Cohan rule to estimate the amount of

petitioner’s gambling losses.

     In reaching our holdings, we have considered all arguments

made, and, to the extent not mentioned, we conclude that they are

moot, irrelevant, or without merit.

     To reflect the foregoing,


                                            Decision will be entered

                                       under Rule 155.
