Zarin v. Commissioner
United States Tax Court
92 T.C. 1084 (1989)
David Zarin (plaintiff), a compulsive gambler, frequented a casino operated by Resorts International Hotel Inc. (the casino) in New Jersey. In April 1980, Zarin signed checks and markers (i.e., negotiable drafts) for $3,435,000 in gambling chips, which were ultimately returned to the casino for insufficient funds. Zarin treated the chips as a loan and did not report them as income on his 1980 tax return. The casino cut off Zarin’s access to credit shortly thereafter. In November 1980, the casino sued Zarin for recovery of the $3,435,000 in gambling debt. In September 1981, Zarin settled the lawsuit with the casino for $500,000. For the 1981 tax year, the commissioner of internal revenue (defendant) assessed $2,953,000 in additional taxable income to Zarin, arguing that Zarin had income from the discharge of indebtedness equal to the difference between $3,435,000 and the $500,000 that he paid. Zarin argued that the regular rule that canceled debt results in taxable income did not apply to his gambling debt because the debt was not enforceable under New Jersey law and he ultimately sustained a loss.
Rule of Law
Holding and Reasoning (Cohen, J.)
Dissent (Ruwe, J.)
Dissent (Jacobs, J.)
Dissent (Tannenwald, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 710,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.Unlock this case briefRead our student testimonials
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.Learn about our approachRead more about Quimbee
Here's why 710,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 44,600 briefs, keyed to 983 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.