                          T.C. Memo. 2004-161



                        UNITED STATES TAX COURT



         EDWARD D. HAMILTON AND YOLONDA B. HAMILTON, Petitioners
             v. COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 8352-03.                  Filed July 12, 2004.



     Edward D. Hamilton and Yolonda B. Hamilton, pro sese.

     Angelique M. Neal, for respondent.



                          MEMORANDUM OPINION


     LARO, Judge:     This case is before the Court for decision

without trial.    See Rule 122.1   Petitioners petitioned the Court

to redetermine an $8,793 deficiency in their 2000 Federal income



     1
       Rule references are to the Tax Court Rules of Practice and
Procedure. Section references are to the applicable versions of
the Internal Revenue Code.
                                    - 2 -

tax.        We decide whether petitioners’ lottery winnings are

includable in their adjusted gross income for purposes of

applying the $25,000 offset of section 469(i).        We hold they

are.2

                                 Background

        The facts in this background section are obtained from the

parties’ stipulation of facts and the exhibits submitted

therewith.        Petitioners resided in Los Angeles, California, when

their petition was filed.

        Petitioners filed a joint 2000 Form 1040, U.S. Individual

Income Tax Return.        They reported on that return the following

items of income (loss) which they realized during 2000:

             Wages                               $118,053
             Interest                               4,731
             Refunds                                  872
             Rental real estate                   (22,300)
             California State lottery winnings    136,041
             Total income                         237,397

The rental real estate is a “passive activity”, sec. 469(c)(2),

in which petitioners actively participated.

                                 Discussion

        Respondent determined that the phase-out rules of section

469(i)(3) preclude petitioners from currently deducting any of

their rental real estate loss.        Under that section, individual

taxpayers such as petitioners who actively participate in a


        2
       We decide this case on its merits and without regard to
which party bears the burden of proof.
                               - 3 -

rental real estate activity and who may otherwise deduct up to

$25,000 of a rental real estate loss, see sec. 469(i)(1) and (2),

must reduce that $25,000 figure by 50 percent of the amount by

which their adjusted gross income exceeds $100,000, see sec.

469(i)(3).   We understand petitioners to be making three

arguments in support of their claim that respondent’s

determination is wrong.   First, petitioners argue that their

lottery winnings are not includable in their 2000 gross income

because they are neither professional nor part-time gamblers.

Second, petitioners argue that their lottery winnings are not

includable in their adjusted gross income for purposes of section

469(i)(3).   Third, petitioners argue that, if their first two

arguments are wrong, the Court should recognize that they are in

a tight financial bind and apply equitable principles to allow

them to deduct at least half of their rental real estate loss.

     We disagree with petitioners’ first argument that their 2000

gross income does not include their lottery winnings.   The wide

reach of section 61(a) brings within a taxpayer’s gross income

all accessions to wealth, United States v. Burke, 504 U.S. 229,

233 (1992), and an accession to wealth on account of gambling

winnings is no exception, see, e.g., Lyszkowski v. Commissioner,

T.C. Memo. 1995-235 (and cases cited therein), affd. without

published opinion 79 F.3d 1138 (3d Cir. 1996).   Contrary to

petitioners’ claim, an accession to wealth on account of gambling
                               - 4 -

winnings is includable in an individual taxpayer’s gross income

whether he or she is a professional gambler, a part-time gambler,

or simply a onetime gambler.   Id.

     Nor do we agree with petitioners’ second argument that their

adjusted gross income under section 469(i)(3) does not include

their lottery winnings.   For purposes of the income tax

provisions of the Internal Revenue Code, the term “adjusted gross

income” is defined by section 62 as gross income less certain

enumerated deductions, none of which is relevant here.     While

section 469(i)(3)(F) also enumerates certain other adjustments

which affect that term for purposes of section 469(i)(3), all of

those enumerated adjustments are inapplicable as well.

     We conclude that petitioners’ lottery winnings are

includable in their adjusted gross income for purposes of section

469(i)(3).   Although petitioners as a third argument essentially

invite this Court to apply some principle of equity to arrive at

a contrary result, we decline to do so.   This Court is not

authorized to ignore such a clear expression of Congress’ intent

as applies here.   Flight Attendants Against UAL Offset v.

Commissioner, 165 F.3d 572, 578 (7th Cir. 1999).
                                - 5 -

     All arguments for a contrary holding have been considered,

and those arguments not discussed herein have been found to be

without merit.   Accordingly,



                                             Decision will be entered

                                        for respondent.
