Fees for representation

[MLINDER42]

I picked up a new client that won $172,000 at a slot casino.Previous preparer took $172,000 loss on Schedule A is now being audited.There are also other problems with return contributions, mortgage interest etc.What should I be charging? Must try to recreate money lost with help of client.Client goes to casino three times a week.

[erchess]

Some people charge by the hour for audit work and others "bundle" so as to start with a large payment that won't have to be refunded. But I would think that depending on where in the country you are you should be able to make between $200 and $400 per hour.

[Kram BergGold]

Think twice

Your comment "must I recreate losses wiht help of client" says to me that you may not be experienced enough for the task at hand. I know I wouldn't want to take on this project.

[taxea]

Fees for representation

KBG has a point.

""must I recreate losses wiht help of client" - absolutely not. Client needs to get win/loss statements from each casino where he gambled for the year in question. I suspect the IRS has these statements and is basing the audit on them. If the client shows more loss than these statements he will have to prove it with documentation.


Personally I don't get involved in audits on returns I did not prepare. taxea

[erchess]

ummmm

The taxpayer gambled on slot machines. Is any casino going to have records of his losses?

[taxea]

Fees for representation

the casino's will have a win/loss record only if the client used a casino card in the slot machines. If not I am afraid he is going to have a difficult time proving his losses.

Living in Hawaii, many of our residents think Vegas is the only place to vacation. I instruct all of my clients to gamble only with a casino card. My checklist to them includes providing the win/loss statement from each casino they gambled in during the year.

It doesn't matter where he won or loss or whether the losses were money spent in order to obtain the specific win. Frequently the client will gamble several times within the year at several casinos and only win big one time at one casino. The law allows him to subtract all losses against all winnings so he is allowed to report the entire years losses against one big win.

Without the win/loss statements, or documented proof from the client of his losses , I will not include "verbally stated losses" on the return.

The preparer who did the original return should be reported to the IRS. . taxea

[quicksam]

I disagree that the preparer should be reported to the IRS. We as prepares can take a clients word on income and deductions as long as "on face value" it doesn't give us reason not to believe them.

The majority of gamblers lose more than they win. Now if a guy working at a federal prison gives me mileage of 125000 miles then "face value" tells me something isn't right.

Wouldn't you agree that probably 80% of gamblers lose money? That fact alone gives me reason enough to believe the word of my client.

[MLINDER42]

Fees For Representation

The client was at the casino 204 days during the year.She has 105 IRS reported individual wins.She did not use her casino card. In 2006 she had $ 54,000 of wins took the same amount of losses no audit. In 2005 she had $132,000 in wins took same amount in losses no audit.When i say recreate we went over debit card withdrawals at the casino ATM.matched them against wins and against tolls on her Eazy-Pass to prove days at casino.

[erchess]

That sounds good to me

as far as the gambling losses go. Where are you in terms of the rest of the Schedule A deductions?

[JohnH]

The preparer who did the original return should be reported to the IRS. . taxea

Why should the preparer who did the original return be reported? The return is being audited and the IRS already has the paid preparer information. What more do they need?

[Black Bart]

Might be helpful for your defense

Here's a good link originally posted (1-26-08) by taxmandan ("Recent Tax Court case on gambling losses") under a thread started by ICOUNT ("Netting Gambling Winnings & Losses").

This past Thursday the US Tax Court rendered a decision on a gambler who claimed losses in based on the bank and ATM records. It is a very interesting case, lengthy but an incredible story. Petitioner won the CA state lottery for $26.6 million, then ended up a 'pathological gambler' spending all his time playing slots at casinos. A very sad but entertaining story to read, and the decision of the judge might surprise you. There is some precedent set here by the court, I think.

Here's the link:

http://www.ustaxcourt.gov/InOpHistoric/GAGLIARDI.TCM.WPD.pdf

Why should the preparer who did the original return be reported? The return is being audited and the IRS already has the paid preparer information. What more do they need?

Agree with this. They've got all relevant info, but even so, why should he be singled out (unless it's for uncommon valor in claiming such a whopping loss)?

[Zee]

The client was at the casino 204 days during the year.She has 105 IRS reported individual wins.She did not use her casino card. In 2006 she had $ 54,000 of wins took the same amount of losses no audit. In 2005 she had $132,000 in wins took same amount in losses no audit.When i say recreate we went over debit card withdrawals at the casino ATM.matched them against wins and against tolls on her Eazy-Pass to prove days at casino.

What year is being audited? If it's 2007 and you cannot substantiate the deduction and lose the audit, your client should also be prepared for audits of 2005 & 2006.

[JohnH]

Bart: Yes, I agree, and I like the uncommon valor idea. I didn't make my point very well. If IRS wants to go after him, it's their call and they already have all the info they need. I certainly wouldn't advocate being a party to throwing him under the bus.

[ED SMITH]

Casino statements are not the only documentation allowable. The following is excerpted from the link BB provided. The IRS will also accept withdrawals made at banks or ATM's near the casino.

At trial,
respondent conceded that petitioner had presented sufficient
documentation to substantiate $127,165 in gambling losses”; “This
documentation consisted of casino ATM receipts, canceled checks
made payable to casinos, carbon copies of checks made payable to
casinos, and credit card statements stating that cash was
advanced at the casinos.”).

[Black Bart]

Nah,

Bart: Yes, I agree, and I like the uncommon valor idea. I didn't make my point very well. If IRS wants to go after him, it's their call and they already have all the info they need. I certainly wouldn't advocate being a party to throwing him under the bus.

you made your point okay -- my question was for taxea rather than you.