David is a CPA and enjoys playing the lottery. This year David won $10,000 in lottery scratch-off tickets. He spent $200 purchasing the tickets. Which statement is true regarding David’s winnings?
a. David must include $9,800 in gross income.
b. David must include the $10,000 in gross income and can deduct $200 as an itemized deduction not subject to the 2%-of-AGI limitation.
c. David must include $10,000 in gross income and can deduct $200 as an adjustment to AGI.
d. David's winnings are not taxable.