1040 nol eliminating affects of wabling and sched a zeroing

[FREDR]

I WOULD LIKE TO DISREGARD THE 1040 LINE 21 INCOME FROM GAMBLING TO REDUCE AVAILABLE CURRENT YEAR AS WELL AS PRIOR YEARS NOL CARRY FORWARD.

THE TAXPAYER NOL IS SOLELY FROM SCHEDULE C.

THEIR IS BASIC EVIDENCE AS WELL AS SPECIFIC EVIDENCE TO REDUCE GAMBLING INCOME TO ZERO USING SCHEDULE A TREATMENT.

THERE MAY BE TIME SPENT, FREQUENCY AND PROFIT MOTIVE EVIDENCE (THOUGH NO PROFIT HAS BEEN ATTAINED IN THE YEARS INVOLVED) TO USE SCHEDULE C. I WORRY ABOUT THIS ONE. THEY HAVE BEEN USING WHATEVER NET WINNINGS RECEIVED FROM TIME TO TIME AS OWNERS CAPITAL IN AN UNRELATED SOLE OWNER BUSINESS.

NEED CITs

RESPECTFULLY

Fred R Hatcher, CTP, MCA, PA
frhatcher@abcats.com

[Bees Knees]

Sorry, Fred, but gross gambling winnings must be reported on line 21 per IRS instructions. It may not seem fair that those gross gambling winning mess up the taxpayer's NOL from a Schedule C business, but those are the rules. IRS fully understands the consequences of putting the gross amount on line 21 and then zeroing them out with a Schedule A deduction. It may zero out the gambling winnings, but it also zeros out the NOL, which of course is why IRS says you have to do it that way. It also messes up credits and deductions which are phased-out due to AGI limitations, and a host of other tax rules affected by the increase in AGI as a result of those gross gambling winnings.

[Snaggletooth]

Professional Gambling

Fred, is your client a "professional gambler?"

If so, Bees, would it introduce a Schedule C instead of Line 21?

I don't know that it makes any difference, and even if it did I would expect the IRS require concrete proof this guy
is a professional...

The only thing "good" about Schedule A treatment for gambling losses is you don't have to shave off 2%.