In the notice of deficiency dated September 24, 1993, respondent determined that petitioners were not entitled to deduct expenses connected with wagering in excess of gross receipts from the wagering activities under section 165(d). Respondent also determined that petitioners were liable for an addition to tax under section 6651(a)(1) for failure to file their return within the1995 Tax Ct. Memo LEXIS 606">*611 time prescribed by law.

Section 165(d) provides that "Losses from wagering transactions shall be allowed only to the extent of the gains from such transactions." In Boyd v. United States, 762 F.2d 1369">762 F.2d 1369, 762 F.2d 1369">1372-1373 (9th Cir. 1985), the Ninth Circuit Court of Appeals stated:

To resolve the conflict between section 162(a) and 165(d), we looked to the rule that a specific statute controls a general statute. * * * Section 162(a) deals with all business expenses, whereas 165(d) specifically addresses gambling losses. Section 165(d) therefore controls, and a gambling loss, although it may be a business expense, is deductible only to the extent of gambling gains. [Citations omitted.]

1995 Tax Ct. Memo LEXIS 606">*612 In an attempt to overcome the limitation of section 165(d), petitioners pose several arguments: (1) Respondent is estopped from disputing their return as filed because the petitioners were issued a refund for the full amount requested on the return by the IRS; (2) they should not be held liable for the deficiency because they gave full disclosure of their position on the Form 8275 attached to their return; and (3) the application of section 165(d) violates their right to equal protection in that it treats professional gamblers differently than taxpayers in other trades or businesses.

In response to petitioners' first argument, the fact that petitioners received a tax refund does not preclude respondent from later determining a deficiency in petitioners' taxes for the same taxable year. Gordon v. United States, 757 F.2d 1157">757 F.2d 1157, 757 F.2d 1157">1160 (11th Cir. 1985); Warner v. Commissioner, 526 F.2d 1">526 F.2d 1 (9th Cir. 1975), affg. T.C. Memo. 1974-243; Hacker v. Commissioner, T.C. Memo. 1993-285, affd. without published opinion 29 F.3d 632">29 F.3d 632 (9th Cir. 1994). In the1995 Tax Ct. Memo LEXIS 606">*613 same vein, the disclosure of a position by a taxpayer does not prevent respondent from later determining that the position is in error. The purpose of Form 8275 is to shield taxpayers from an addition to tax for negligence or substantial understatement of income tax. See secs. 6653, 6661(b). In response to petitioners' final argument, we quote our decision in Valenti v. Commissioner, supra: "The argument that section 165(d) violates equal protection as applied to those engaged in the trade or business of gambling borders on the frivolous. We reject it without further discussion."

Respondent determined that petitioners are liable for an addition to tax for filing their 1990 Federal income tax return after the due date. Section 6651(a)(1) provides for an addition to tax in the amount of 5 percent of the amount of the tax if the failure to file is for not more than 1 month, with an additional 5 percent for each month in which the failure to file continues, not exceeding 25 percent of the tax in the aggregate. The addition to tax is applicable unless it is shown that the failure to file is due to reasonable cause and not willful neglect.

Respondent1995 Tax Ct. Memo LEXIS 606">*614 contends that petitioners' 1990 tax return was due on April 15, 1991, and that the return was not filed until August 19, 1991. Petitioners maintain that they had an automatic extension of time to file their tax return. While it is true that petitioner filed an application for an automatic extension of time, respondent contends that the application is invalid because petitioners failed to estimate properly their tax for 1990 when they filed their Form 4868. Sec. 1.6081-4(a)(4), Income Tax Regs.

On their application for extension, petitioners estimated their 1990 tax liability, without taking into consideration their gambling losses, to be $ 13,660. After deducting taxes withheld of $ 11,847, petitioner remitted a check to the IRS in the amount of $ 1,813. In the notice of deficiency, respondent determined that petitioners' 1990 tax liability was $ 13,824. The deficiency resulted from the refund issued to petitioners after they filed their return on August 19, 1991.

Exactitude is not required in making an estimation of one's tax liability for purposes of an automatic extension. Crocker v. Commissioner, 92 T.C. 899">92 T.C. 899, 92 T.C. 899">907 (1989). A taxpayer must make a 1995 Tax Ct. Memo LEXIS 606">*615 bona fide and reasonable estimate of the tax liability based on the information available when a request for extension is made. 92 T.C. 899">Id. at 908; see Berlin v. Commissioner, 59 F.2d 996">59 F.2d 996 (2d Cir. 1932), affg. a Memorandum Opinion of this Court. Therefore, we find that petitioners properly estimated their tax liability, and, as such, the time in which petitioners were permitted to file was extended 3 months. Because the envelope containing their 1990 return was postmarked on August 15, 1991, we conclude that petitioners are not liable for an addition to tax under section 6651(a)(1).

To reflect the foregoing,

Decision will be entered for respondent, except as to the addition to tax under sec. 6651(a)(1).