§165(d) – deductibility of gambling losses to extent of gains – during taxable years of such transactions. Gain from discharge of debt came in 1981 but losses in 1980.
Purchase price adjustment argument – §108(e)(5) – but chips only bought “opportunity to gamble” not property.
WAIT! Third Circuit reverses this opinion – treats as disputed debt and also Zarin did not hold property b/c he was not liable on the debt and therefore cancellation of indebtedness provisions don’t apply and there is no income.