Tax Memo - Gambling Activities

Tax Memorandum
TO: Mr. Green
FROM:
DATE: Week 4
RE: Gambling Activities
set off One and Applicable Case Law, statute & Regulations

It has come to our management that you requested to know which criteria is used to determine if your drama activities bring about a conduct or commercial enterprise status for the national income tax purposes and if we think your gambling activities qualify for trade or business status.
The case of Commissioner v. Groetzinger, 480 U.S. 23 1987 is approriate for deciding if the gambling operation has trade or business status. The Supreme Court verbalize that some factors had to be considered by the commissioner in determining if a taxpayers gambling activities constitute trade or business status. Treasury Regulation 1.183-2 (a) listed these factors as taxpayers gambling mode: done in good faith for profit fashioning reasons, done in full-time basis or fullest consummation if he has employment elsewhere, maintaining records of daily wagers, net profit and losses, the gambling action at law is solely for his own account yet he does not function as a bookmaker, the extent the he improves teaching of gambling enterprise and taxpayer claims deductions associated with the conduct of a trade or business for gambling expenses.




Section 62(a) (1) of the Internal Revenue Code shows the deductions permitted and they include the deductions that are as a result of the trade or business activity.
Mr. Green, you have an interest in gambling every weekend, thus you are a frequent gambler but you do not do it for profit making purpose. Furthermore, you have a physician job in Chicago, so gambling is not your profession. Therefore, part of your gambling activities qualifies for trade or business status but others do not.
Issue ii and Applicable Case Law, Code & Regulations

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