Facts: Your client, Mr. Roy L. Flush, is a full-time professional poker player who lives in Las Vegas, Nevada. Roy has been competing in poker tournaments for many years. For the last several years, Roy has been very successful, and his poker tournament winnings have far exceeded his losses and expenses. Unfortunately, last year was not a good one for Roy. Last year, Roy won money at some poker tournaments, amounting to $180,000 in winnings, but he lost $260,000 in other poker tournaments. In addi- tion, Roy incurred the following expenses last year: (a) Travel to poker tournaments (held other than in Las Vegas): $2,500 and (b) Tournament admission/entry fees: $10,500. Roy also earned $90,000 of investment income last year. Roy recently told you that he assumes that, due to his losses and expenses, he will not owe any federal income tax for last year but has asked you to confirm that for him. Required:

First Step: WRITE A MEMO - IN MEMO FORMAT Identify the relevant Code Sections and regulations and find a court decision that is relevant to Roys situation. Be sure to check the citator and the Code to make sure that the case is current, and that subsequent authority has not affected the precedential value of the decision. ( Hint: The court decision you find may predate amendments made to the Code; this may affect your conclusion and the advice that you provide to Roy in the next step.)