Gambling Losses

[taxgirl]

During one of my continuing ed classes this fall, they made a big to do over gambling losses per session and recordkeeping. I'm curious how everyone else handles these situations. First, no one who is a casual gambler has a "diary" of any sort, they have their win loss statement. A client of mine dropped off a winning statement from one casino (1500) and a win/loss statement from another casino(-4000). Clearly, the losses aren't from the same "session" so I'm thinking I'm not going to allow any of them. Would you agree?

Second, the win/loss she gave me shows a positive number in January but losses for every other month. Should I allow the 4,000 in losses for every other month to gobble up her $300 winnings in January?

Yes she itemizes and I realize I can only take the loss to the extent of the win.

[DonB]

During one of my continuing ed classes this fall, they made a big to do over gambling losses per session and recordkeeping. I'm curious how everyone else handles these situations. First, no one who is a casual gambler has a "diary" of any sort, they have their win loss statement. A client of mine dropped off a winning statement from one casino (1500) and a win/loss statement from another casino(-4000). Clearly, the losses aren't from the same "session" so I'm thinking I'm not going to allow any of them. Would you agree?

Second, the win/loss she gave me shows a positive number in January but losses for every other month. Should I allow the 4,000 in losses for every other month to gobble up her $300 winnings in January?

Yes she itemizes and I realize I can only take the loss to the extent of the win.

IMO the session method is impossible. To use it the TP should have a diary detailing their gambling activity. As you stated, such a diary is never kept by casual gamblers.

I ask clients to get statements from all casinos where they played and if the net of them is a loss, I take that loss up to the amount of the win.

[DonB]

IMO the session method is impossible. To use it the TP should have a diary detailing their gambling activity. As you stated, such a diary is never kept by casual gamblers.

I ask clients to get statements from all casinos where they played and if the net of them is a loss, I take that loss up to the amount of the win.

I should have said the loss would be a miscellaneous deduction on Schedule A.

Using the session method you would end up with a net amount on line 21 of the 1040. This will most likely result in a CP2000 and records will have to be produced.

[Jiggers]

Google Shollenberger v. Commissioner for a court case that allows the netting of sessions. There is also a proposed revenue procedure Notice 2015-21 that will allow this. The proposed revenue procedure references this court case.

HOWEVER, I have tried to get the IRS to accept this information on a case. They refused and the only alternative was to go to tax court. The additional tax was minimal, so the client decided it was cheaper just to pay.

You can never hae an overall net loss on a return related to gambling. You just zero it out.

[DonB]

HOWEVER, I have tried to get the IRS to accept this information on a case. They refused and the only alternative was to go to tax court. The additional tax was minimal, so the client decided it was cheaper just to pay.

I have an associate who had the same experience.

[taxea]

I input all the information from each w/l statement.

[FEDUKE404]

Grouping the sessions can be a challenge

At our fall tax training we also had some discussions about gambling winnings etc.

Consensus was the rules fairly well stipulate "sessions" must be considered (no running total) . . . gains and losses most be separately considered (no netting) . . . but there is where the fun begins.

If you win at Casino A, cross the street to Casino B and lose a bunch, can those offset? (Choose your answer!)

Or, if "daily" sessions and related records is an issue, what do you do if you keep losing all night but around 12:05 am get lucky at the same casino? (Choose your answer!)

And, of course, to use any allowable losses they can only show up on Schedule A line 28 as (unreduced by 2% AGI) miscellaneous deductions.

Fortunately, my clients are not heavy rollers but peaked out by buying a few lottery tickets.

FE

[TAXNJ]

4-15-15 post

See above mentioned post.

reference:

https://www.legalmatch.com/law-libra...nd-losses.html[/QUOTE]

ALSO, noted below is one of the better 4-15-15 reply posts from Poster Jiggers:
Jiggers;173131]Check out "Shollenberger v. Commissioner" and "Chief Counsel Memorandum 2008-011". Also the new proposed regs implementing the procedures mentioned in these two.

The key is the annual detailed report from the casino.

You have to do a worksheet that shows the winnings per day, the losses per day. You can't deduct the losses on days that you have a net loss. You do have to report the days with winnings in excess of losses. In other words, you can't just report the W-2G.

The other alternative is to just report the W-2G