Thursday, March 23, 2017

Gambling Taxation - Part 4. How to Be a Professional Gambler

Two posts back, I discussed the Internal Revenue Code section that limits any deduction for gambling losses to the amount of gambling winnings. In other words, if a bettor has a bad year and ends up with a net loss, that loss cannot be applied against other income, such as a salary or a consulting fee, to reduce total taxable income. But, even with that limitation, it’s better if the IRS says you’re in the “trade or business” of gambling, as opposed to gambling as a hobby or recreation. Here’s why.
Someone who’s in a trade or business can deduct all the “ordinary and necessary” expenses of that business. For a horse-race bettor, that would include the cost of past performances (yes, you, Daily Racing Form, with your $9 tabloids!), handicapping software and advice, travel to the track, as long as it’s not a daily commute, track admission and parking, internet service provider costs for those who bet online, some of the cost of meals while at the track, and even, in a couple of cases, ATM fees at the track. No, you can’t deduct net gambling losses, but these other expenses are still valuable as deductions.
Even more important – and here I have to get a little wonkish – being in a trade or business lets you take your deductions on a Schedule C, for sole-proprietorships, instead of on a Schedule A, for personal deductions. Here’s why that’s important.
First, when gambling income is listed on the Form 1040, and then gambling expenses and losses (the latter only up to the amount of winnings) are taken as personal deductions, that has the effect of increasing a taxpayer’s gross income. That, in turn, means that the Internal Revenue Code’s limits on personal deductions are also increased. Some deductions disappear entirely for taxpayers with high gross incomes, and some, like those for “miscellaneous business expenses” (those Racing Forms again) and medical expenses, must exceed a certain fraction of the taxpayer’s gross income to qualify. So, the higher the gross income, the higher the threshold before those expenses can be deducted.
Second, even apart from the increase in gross income, having to report expenses as personal, on a Schedule A, has its own drawbacks. Under current law, those miscellaneous deductions are allowable only to the extent that they are more than 2% of gross income. So, for a taxpayer with $100,000 in gross income, that means the first $2,000 of expenses are non-deductible.
In contrast, if someone is in the trade or business of gambling, then all this income and all these deductions go into the Schedule C business form. Instead of having to take the wagering losses and the expenses as personal deductions, they get subtracted from the wagering income right on the Schedule C, and only the bottom line of the Schedule moves over as income or loss onto the Form 1040.  No limitation on deductions, no artificial increase in gross income.
So, how do you get to be a professional, in the “trade or business” of gambling? The answer is in Internal Revenue Code Section 183 and the Regulations and court cases that have interpreted it.
Section 183 distinguishes between activities engaged in for profit, on the one hand, and all other activities. If an activity is not engaged in for profit, then the only allowable deductions are (1) deductions that would be allowable without regard to trade or business status (e.g., certain state and local taxes or interest); and (2) business-related deductions incurred in the activity, including a professional gambler's wagering losses and incidental expenses, but only to the extent of any taxable income that remains after subtracting the first category of generally allowable deductions. So, if you’re not a professional gambler, you can never have a net loss from gambling that reduces your tax bill from non-gambling activity.
Section 183 also establishes a presumption that an activity is engaged in for profit if gross income from the activity exceeds the deductions attributable to it in at least three of the most recent five taxable years. It’s only a presumption, though. The IRS can still argue that your gambling is just a hobby, even if you show that three-out-of-five-year profit.
The Treasury Regulations spell out the factors that matter in deciding if you’re in a trade or business. You don’t need a perfect six out of six, but most people who win their cases have at least a majority of the factors on their side.
First, the manner in which the taxpayer carries on the activity, in particular whether he or she carries it on in a businesslike way and maintains complete and accurate books and records. On this criterion, the casual gambler, going to the track or the casino every few weeks and not maintaining regular ledgers, would appear to fall in the hobby/recreation category, while those (relatively few) gamblers who maintain detailed and complete records would be seen as reasonably seeking a profit.
Second, the expertise of the taxpayer (or of the taxpayer's advisers). On this criterion, the gambler who has read all of Andy Beyer or who has served a faithful apprenticeship to an acknowledged expert in the field – think Andy Serling sitting in Steve Crist’s box at Belmont all those years -- is more likely to be seen as engaging in the activity for profit. Buying a tip sheet on your way into the track might not qualify. Interestingly, the Tax Court has treated a taxpayer’s development of a “system” for beating slot machines as evidence of expertise. I guess the Tax Court judges themselves are a bit lacking in such expertise.
Third, the amount of time and effort the taxpayer spends on the activity. Unless, according to the regulations, if the time and activity has substantial personal or recreational aspects. In other words, the more fun one is having, the less likely the IRS is to view the activity as engaged in for profit. The more you hate going to the track, the more likely you are to be a professional.
Fourth, the presumption that an activity is carried on for profit if it actually shows a profit in three of five years. Aha! You think, I can show a $100 profit in each of three years and a $10,000 loss in each of the other two. Nope. The relative size of the profits and losses is also relevant. A presumption is just that, a presumption.
Fifth, the financial status of the taxpayer. Do you really look to gambling to pay the rent and buy groceries? The wealthy industrialist or actor, for example, who gambles heavily, might not be seen to be engaging in gambling for profit, but the working-class retiree, whose only other source of income is a Social Security check, might have a stronger case.
Sixth and last, whether the activity contains elements of personal pleasure or recreation. This raises some generally troubling issues; most people, presumably, would prefer to work in occupations that gave them some personal satisfaction. To say that achieving such a goal puts the tax deductibility of legitimate expenses in jeopardy seems perverse.
No one of these factors is decisive. In each case the IRS and the courts weigh them all and reach a decision.
There has been a flurry of court cases in the past decade involving gamblers who seek to be classified as being in the trade or business. There have been several cases where the IRS agreed that the taxpayer was a professional gambler, others in which the Tax Court rejected the gambler’s claims, and a few where the Tax Court overruled the initial IRS determination and found the taxpayer actually was in a trade or business, most recently, in February of this year, in the case of a poker player who succeeded in deducting travel expenses for his trips to Las Vegas and Atlantic City casinos by showing the court that he played tournaments most weeks in the year.
But the general trend of the cases is against us. Relatively few gamblers approach their task with the single-mindedness of purpose necessary to escape the limitations described above. Those that do win in court typically spend at least 40 hours a week gambling. Thus, most losing gamblers would still not be able to deduct losses and expenses in excess of their winnings.

Next, the importance of keeping good records.

Friday, March 17, 2017

Gambling Taxation - Part 3 - But Isn't That Unconstitutional?

In my previous post, I discussed the limitation imposed by Internal Revenue Code Section 165(d), which prohibits gamblers from using losses that exceed their winnings to offset other income. Today’s post asks whether that limitation is a violation of the US Constitution’s equal protection guarantee. I’m not the first to raise that issue, and the courts have, so far, sided with the IRS and against the taxpayers who have raised it. But, in the interest perhaps of saving some folks unnecessary legal fees, here’s my analysis of the issues.

Federal tax law treats gamblers differently from other categories of taxpayers. On rare occasions, gamblers have used the fact of this different treatment to claim that their Constitutional rights have been violated. In the 1994 Tax Court case, Valenti v. Commissioner, and in the 2014 case of Lakhani v. Commissioner, the taxpayers, both “professional” horse race bettors, asserted that such differential treatment amounts to a denial of equal protection or due process. The starting point for their – ultimately unsuccessful – argument is the 14th Amendment to the US Constitution, which provides that:

. . . . Nor shall any State . . . deprive any person within its jurisdiction of the equal protection of the laws.

While the Equal Protection Clause, in its own terms, does not apply directly to the federal government, the Supreme Court has held that the Due Process Clause of the Fifth Amendment imposes a similar equal protection obligation on the federal government. Thus it is at least theoretically possible that a federal tax statute may be so discriminatory as to violate the equal protection-due process requirement. To take an example that is no longer as far-fetched as we might have thought, a tax that applied only to Muslims would not only violate the 1st Amendment’s guarantee of religious freedom but would also be a denial of equal protection.

In the case of Code Section 165(d), which disallows any deduction of net gambling losses, the taxpayers’ argument was that the law singles out gamblers and treats them unequally compared, say, to commodities futures traders or the issuers of credit default swaps, both of which are essentially bets.

Well-established equal protection doctrine, however, made it unlikely that a challenge to tax statutes singling out gambling would succeed. Unless a higher level of judicial scrutiny is mandated because the government action creates a suspect classification (like race, for example) or impinges on a fundamental right or interest (like free speech or religion), in which case a “strict scrutiny” standard is applied, all that is required to sustain a statute or administrative action against an equal protection attack is for the court to find a rational basis, that is, any possible logical relationship between the governmental action and any permissible governmental objective. As the Supreme Court said in a 1953 case:

The general rule is that legislation is presumed to be valid and will be sustained if the classification drawn by the statute is rationally related to a legitimate state interest. When social or economic legislation is at issue, the Equal Protection Clause allows the states wide latitude, and the Constitution presumes that even improvident decisions will be rectified by the democratic processes.
More specifically, in a 1992 case, the Supreme Court upheld a California initiative provision that reassessed residential property only upon sale, with the result that more recent buyers paid substantially higher taxes than long-term residents. The Court said:

In general, the Equal Protection Clause is satisfied so long as there is a plausible policy reason for the classification, the legislative facts on which the classification is apparently based rationally may have been considered true by the governmental decision maker, and the relationship of the classification to its goal is not so attenuated as to render the distinction arbitrary or irrational. This standard is especially deferential in the context of the classifications made by complex tax laws.

Even under this very deferential rational-basis standard, a few tax laws and administrative procedures have been held so irrational as to violate the Equal Protection Clause. For example, in 1985 the Supreme Court invalidated three state tax laws: (1) an Alabama statute imposing higher taxes on out-of-state insurance companies than on those based in the state; (2) a Vermont statute imposing automobile use taxes only on those cars registered in Vermont by persons who had been nonresidents at the time of the automobile purchase, but not on those bought by Vermonters; and (3) a New Mexico property tax exemption that applied only to certain veterans who moved into the state before a particular cut-off date.

The relatively few Supreme Court federal tax cases that have addressed equal protection issues have uniformly upheld the Code and its application by the Internal Revenue Service. For example, lower federal courts have denied equal-protection challenges to the differential rate structures for married and single taxpayers. The Supreme Court had always refused to hear appeals from these decisions until its landmark decision of LGBT rights in its 2013 decision in U.S. v. Windsor. In that case, the Court held that a validly married same-sex couple was entitled to the same benefits under the estate tax laws as a heterosexual couple. But that case involved gender – a suspect classification – and the right to marry – a fundamental right. The right to bet on horse races probably doesn’t rise to the same level of Constitutional protection.

Horse race bettors, as noted above, have raised the equal protection argument, twice, in 1994 and in 2014, each time with the same result, upholding Section 165(d)’s denial of net losses. In the 1994 case, Valenti, the Tax Court concluded, without much analysis, that Congress could have had a “rational basis” for treating gambling differently from other businesses. The 2014 Lakhani case added a specific rationale that might have been what Congress had in mind back in 1934 (if, indeed, Congress can ever be said to have anything in mind), namely, that the limitation on losses was really a device to ensure that gamblers reported their winnings.

So, if you think discriminating against gamblers in the tax laws is unconstitutional, my advice is: get over it. The courts have been there and done that, and there’s essentially zero likelihood that the established rule will change. Yes, it is true that horse race bettors and other gamblers are treated unequally with, say, commodities traders or other “investors” in zero-sum financial market bets. But, short of having someone in Congress like Joe Bruno, New York’s former State Senator (R-Horse Racing) to push our interests, there’s not much we can do about it.

So, what can we do, given that the loss-deduction rule isn’t going to change any time soon? For a start, those of us who are serious bettors can do whatever it takes to ensure that we’re in the “trade or business” of gambling, so at least we can deduct expenses, like our purchases of the obscenely overpriced Daily Racing Form. That’s the subject of the next couple of blog posts on taxation, which will appear after a brief intermission for the OBS two-year-old sale this week.

Thursday, March 16, 2017

The OBS March 2YO Sale: Good at the Top, Not So Much Lower Down

The Ocala Breeders Sales Co.’s (OBS) March sale of two-year-olds in training, the second big sale of the year, is in the books. You can see the complete results here, and the conventional rose-colored-glasses interpretation by the industry press here, here and here

The way I see the results, there are three notable results: (1) for the sale as a whole, it was pretty much business as usual, with overall results similar to the last couple of years; (2) breaking the sale down, there was a good market at the top, but lots of weakness lower down; and (3) we saw a pinhooking home run for first-time sellers Zayat Stables. Here are some details.

Overall, 414 of the 677 horses originally catalogued for the OBS March sale went through the ring, with 300 (72.5%) of them selling, either in the ring or post-sale, before they left the sales grounds. That’s on a par with last year, when 73.7% of horses that went through the auction ring found new owners.

Although the gross and the average for the sale were both ahead of last year, the median price, a better indicator of the overall health of the auction and one that isn’t swayed by a few high-priced stars, actually declined by an insignificant 2.5%, from $102,500 last year to an even $100,000. So, taking all these indicators together, this year’s March sale was pretty much business as usual.

But, to move to my second point, the overall clearance rate – the percentage of horses cataloged that eventually were sold, was a mere 44.3%, similar to what it was at the Fasig-Tipton Gulfstream sale earlier this month, but less than OBS had seen in recent years. At OBS, there were 677 horses original listed in the catalog. Of those, 263 were scratched, many of them between the breeze show last week and the actual sale on Tuesday and Wednesday. So, lots of horses that breeders and pinhookers hoped to sell are still at home, waiting for buyers. Looking at the results sheets for the sale, it appears that most of those through the ring but not sold (RNAs) fetched final bids somewhere between $40,000 and $100,000. This range is what has come to be called the “middle market.” My guess is that many of the horses that were scratched had originally been expected to bring similar prices, since the cheaper horses, the ones with less pedigree or poorer physicals, tend to be entered in OBS’s later sales, in April and June. So the March OBS results show substantial weakness in that middle market, and we haven’t even reached the lower market strata (where people like me search for that overlooked diamond in the rough). Even though there’s been substantial adjustment since the 2008 financial crisis, with a huge drop in the number of foals born annually, it still looks like there are still too many horses for the available demand. Further adjustment is on the way, because that’s the way capitalism works.

Returning to the top of the market, the big surprise was the first-year success of Zayat Stables’ pinhooking venture. Previously, Ahmed Zayat and his team had focused, with excellent results, on buying horses to race. Now, having won the Triple Crown with American Pharoah and established Pioneer of the Nile as a major stallion, they’re branching out. The Zayats entered a number of horses at both the F-T Gulfstream and the OBS March sales. Not all sold: two were RNAs and one broke down in the F-T breeze show and had to be euthanized, but overall, the success rate was astonishing. Here’s a list of the Zayat horses that were pinhooked at the two sales and went to new owners:

Ÿ          F-T Hip 132 (f. Pioneer of the Nile–She Herarah) bought for $180,000 at Keeneland September, sold (post-sale) for $350,000.
Ÿ          OBS Hip 493 (c. Curlin-Devious Intent) bought for $425,000 at Keeneland September, sold (post-sale) for $350,000.
Ÿ          OBS Hip 178 (c. Tapizar-Shining Victory) bought (post-sale) at F-T October for $50,000, sold for $50,000.
Ÿ          F-T Gulfstream Hip 118 (c. Bodemeister-Pink Diamond) bought for $190,000 at Keeneland September, sold for $750,000.
Ÿ          F-T Gulfstream Hip 21 (c. Tale of the Cat-Awesome Bull) bought for $160,000 at F-T Saratoga, sold for $250,000.
Ÿ          OBS Hip 360 (f. Congrats-Azalea Belle) bought for $250,000 at Keeneland September, sold for $1,700,000 (the OBS sale topper).
Ÿ          OBS Hip 489 (c. Mission Impazible-Deputy Reality) bought for $185,000 at F-T July, sold for $280,000.

So, for the seven Zayat pinhooks that did sell, that’s aggregate sales proceeds of $3,730,000, compared to an aggregate purchase price of $1,450,000, or a return on investment of 157%. Even after factoring in the agents’ and auction-house commissions, the training costs and the prices of the horses that weren’t sold, that’s still something like doubling their money in less than a year. Lots of credit all around – to the Zayats, father and son, to the EQB team led by Jeff Seder and Patti Miller, who picked out the horses (disclosure: I worked with Jeff and Patti at Keeneland), to the McKathan Brothers, who trained the horses up to the sales and consigned a couple of them, and to consignors Eddie Woods and Ciaran Dunne.

Saturday, March 11, 2017

Gambling Taxation Part 2 -- Limits on Deductions

This is the second in a series of blog posts about the tax treatment of gambling. The first post applauded the decision by the Treasury Department to propose revised withholding regulations that adversely affected bettors who made big scores on exotic wagers. This one looks at the deductibility of gambling losses and of gambling-related expenses, like buying the Daily Racing Form. Future posts will examine the constitutionality of treating gambling differently from other kinds of economic activity, the application of the “hobby loss” rules to gambling, and the difficulties involved in fairly determining gambling gains and losses. Eventually, it may all end up in a law review article, the first such critical survey of gambling taxation since I originally tackled the subject back in 1995.

Deductions are something every taxpayer wants to have. Every allowable $100 deduction reduces the taxpayer’s tax bill by a substantial fraction of that $100, depending on the taxpayer’s marginal tax rate (that is, the rate she pays, under our somewhat graduated tax system, on her last dollar of income). Because the tax rate table is graduated, a deduction is worth more – lots more – to a rich person than to a poor one. Those with incomes under $9,325 in 2017 will get only a $10 benefit from that $100 deduction, since their marginal rate is 10%, while those with incomes over $418,400 will get a benefit of $39.60.

Deductions are allowable for gambling losses, but not to the extent that one would think, given the broad language in Internal Revenue Code Sec. 165(a). That section allows a deduction for any losses incurred in a transaction entered into for profit, even if that transaction is not part of a trade or business. Thus, in the absence of a specific statutory limitation, one could reasonably presume that all gambling losses, or at least those that were the result of profit-oriented transactions, and not mere self-indulgent consumption, would be deductible against income from other sources, like a salary for the gambler’s day job or, to match horse racing’s demographic, a taxable pension. But that reasonable presumption is denied by Code section 165(d), which provides, in its entirety, that “losses from wagering transactions shall be allowed only to the extent of the gains from such transactions.
This limitation, as it has been elaborated by the courts in the nearly a century since its initial enactment, imposes a burden on gamblers that is not borne by other similarly situated taxpayers. Traders in commodity futures, or even in stock options, for example, don’t face the same limitation on losses; if they lose money in a year on their “trading” activities, which are economically nothing more than placing bets, they can fully deduct those losses against other kinds of income, like a bonus from their employer. But a full-time horseplayer who has a losing year at the track can’t do the same.
A more equitable approach would be for Congress to repeal section 165(d) and to rely on other generally applicable Tax Code provisions to protect the Treasury against over-reaching by gamblers, in the same way that the “at risk” and “hobby loss” provisions of the Code (to be discussed in future posts) generally act to limit the deductibility of expenses and losses.
Before the enactment in 1934 of what is now section 165(d), the principal distinctions regarding deductibility of gambling losses (whether against gambling winnings or against other income) were whether the losses had been incurred in legal or illegal gambling and whether gambling transactions had been entered into for profit. For example, an early Bureau of Internal Revenue (the predecessor of the IRS) ruling took the position that losses incurred in betting on horse races in Arkansas, where such wagers were then illegal, were nondeductible, while wagers across the state line in Louisiana, where they were legal, could give rise to deductible losses.

Under that early case law, even those losses incurred in legal gambling were deductible only if the taxpayer could show that the gambling transactions were entered into for profit. Thus, an independently wealthy taxpayer, with a steady record of losses at fashionable resort casinos in Europe, was found to lack the requisite profit motive, although his gambling was legal, because his real motive, at least the way the court saw it, was “the thrill and exhilaration  . . . inherent in taking a chance.” In contrast, a poorly paid journalist, who lost money at the racetrack while covering the races, was permitted a deduction, based on his testimony that he did not much enjoy watching the races and bet only in order to make money. Even then, apparently, the ink-stained wretches in the press box couldn’t resist a trip to the window.

Congress originally enacted what is now section 165(d) in 1934. That original version of the statute left open the question of whether the limits on deducting losses applied to all gamblers or only to casual gamblers (i.e., those for whom gambling is an occasional recreation and who are not in the trade or business of gambling). As we’ll see shortly, the courts have applied the rule to all gamblers, though only professionals can deduct expenses.

That left it up to the courts to decide, based on how they interpreted the statute. They did so very restrictively, refusing to allow anyone, including a fulltime gambler, to deduct gambling losses against anything other than gambling winnings. This restrictive interpretation appears to have been based on the courts’ view that gamblers were inherently immoral. For example, the Court of Claims described gamblers in the following terms:

In practically all countries, a distinction has been made in the public mind and in legislative enactment between the occasional wagerer and the professional who undertakes, without work, to wring a living from the wages of others. The professional or common gambler has never occupied a high position in society. . . . The churches have generally opposed gambling as immoral. The Talmud classes gambling winnings with thievery.

That Talmudic reference might be news to some of the most renowned figures in horse race betting, from Arnold Rothstein to Steve Davidowitz, Len Ragozin, Len Friedman and many other successful Jewish bettors.

On the basis of this moral disapproval of gambling, any interpretation of the new statute that would apply the gambling-loss limitation only to the occasional recreational wagerer and not to the parasitic, thieving, professional gambler bookmaker was foreordained to fail.

In 1947, in Humphrey v. Commissioner, the first significant appellate court interpretation of the new limitation, the Court of Appeals for the Fifth Circuit held that the 1934 legislation had eliminated the distinction between legal and illegal gambling to the extent that a gambler did not have to show a profit motive to be eligible to deduct gambling losses up to the amount of gambling winnings. But by holding that what is now section 165(d) was the exclusive provision for treating gambling losses, the court also treated professional gamblers, whether in the bookmaking business or gambling full-time for their own accounts, differently from most other taxpayers, who are generally able to use losses incurred in one activity to offset income from another activity.

In addition, the courts on occasion confused the gambler’s ordinary business expenses with wagering losses, refusing to permit gamblers to deduct not just their losing bets, but also the reasonable expenses incurred in order to place those bets, like purchasing the Daily Racing Form or paying admission to the track, from anything other than their winnings. Fortunately, for the full-time bettor at least, that interpretation was just recently rejected by the Tax Court, in the 2011 case of Mayo v. Commissioner. There, the taxpayer made $131,000 in bets, cashed tickets for $120,000, and tried to deduct both the $11,000 wagering loss and his additional $11,000 in expenses, including $4,000 for vehicle and transportation costs, $1,960 for handicapping data (this data should be free if we want to grow racing!), $1,251 for track admission fees, $1,056 for subscriptions, $670 for telephone and internet charges and, perhaps in a bit of chutzpah, $148 in ATM fees at the track. The court said that Section 165(d) prohibited the deduction from other income of the actual betting losses, but allowed the expenses, which had the effect of wiping out any tax attributable to the wagering. Some small consolation, if not a total victory.

One might, in analyzing gamblers, distinguish among three types: (1) those for whom gambling is clearly central to their trade or business – for example, “shills” hired by poker rooms to create the illusion of activity and to attract real, paying customers; (2) those who gamble with a sincere and genuine profit motive (whether, in fact, they win or lose in a particular time period); and (3) those for whom gambling is primarily recreational, although most people would probably prefer to win rather than lose. The application of section 165(d), however, recognizes no difference among these three categories. As a result, in many cases, the section 165(d) limitation operates unfairly. While some courts have expressed uneasiness at the strict application of the wagering-loss limitation, they have generally followed the advice of Justice Brandeis that “ it is usually more important that a rule of law be settled, than that it be settled right.” The broad reach of the gambling loss deduction, as the courts have interpreted it, may be a settled rule, but it is almost certainly wrong.

A possible justification for such a broad reach for section 165(d) might be that the statute, at least when read together with section 162(a), is ambiguous and that, in the light of such ambiguity, courts are justified in interpreting the statute in a manner consistent with an underlying legislative policy that gambling, as a supposedly unproductive activity, should not be accorded the slightest degree of favorable tax treatment. There are, however, two problems with such an approach. First, the legislative history is somewhat lacking in evidence that Congress has ever made such an explicit judgment. Second, the presumed dichotomy between the economic and social utility of the financial markets on the one hand and the unproductive nature of gambling remains to be proven. In fact, if you’re looking for economic impact, horse racing, supported by gambling, employs many more people per dollar than does Wall Street. And, as US Attorney Preet Bharara’s investigations have proved, there are probably more thieves per capita on Wall Street than on the backstretch.

In a parallel universe, tax reform might well include the repeal of Section 165(d), putting professional bettors on a par with professional pork-belly traders. In the actual universe we live in right now, I’m happy to lay you 100-1 that Section 165(d) and its discrimination against full-time handicappers is still in place when we’re all dead.