Frank J. Wilson is a part-time CPA earning wages of $80,000 annually. Mr. Wilson is also a professional blackjack player whose gambling activities rise to the level of a trade or business. In some years he’s won a lot of money (over $1 million in winnings once), and in others he’s lost a lot of money. This year, Mr. Wilson generated $25,000 in winnings and $216,000 playing blackjack.

Mr. Wilson keeps meticulous records of his gains, losses and expenses. Besides gambling winnings and losses described above, this year Mr. Wilson also incurred $15,000 in ordinary business expenses in conducting his gambling business (mainly, compensation for a part-time secretary). The casinos picked up his meals, entertainment, and room costs of $150,000, that is, he was “comped” for these costs.

Issue 1: In 2020, to what extent are the losses and expenses related to Mr. Williams’ gambling deductible?

Issue 2: If the year were 2015, would your answer to Issue 1 change?

Please answer the question based on the facts and issue:

1) Give a simple, nontechnical 1 sentence answer to the question posed.

2) What is (are) the Code section(s) at issue?

3) Are any Treasury Regulations relevant?

4) List the case/ruling authority on which you relied to arrive at your answer (please provide the name of any case, not just a citation).

Answer rating: 100% (QA)

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