Netting Gambling Winnings & Losses

[peanut]

Gambling winnings and losses are not allowed to be netted except for the professional gambler. I think each session is a calculation of a winning or loss. In other words each time the slot machine is pulled that is a separate session and no netting is allowed even if it is the same slot machine that you played for hours. Some casino's upon request prints out the total winnings and losses per year. Does anyone know how they calculate it? Should the preparer insist upon such a printout if he is aware that the client has gambled perhaps the client has some w-2gs. If you don't could there be a preparer penalty for substantial understatement of tax. Interested in how everyone is handling the situation>

[Jesse]

http://www.allbusiness.com/accountin...4509452-1.html

S T posted this link a while back that may help you. Also search threads for gambling losses and you'll find some interesting discussions.

[taxmandan]

Recent Tax Court case on gambling 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

Enjoy.

[veritas]

I did enjoy very much

As a preparer my antenna started going up when the following was discussed,

Gagliardi did not maintain a contemporaneous “gambling
diary” or a “gambling log” that reflected his winnings and losses
from gambling on the slot machines at the casinos. Mr.
Hunner did not advise Mr. Gagliardi to maintain a contemporaneous
gambling log or diary.


This case is going to give the service fits.

And I got a great quote too.

[veritas]

And the IRS

using Wikipedia, that was rich.

[Jiggers]

Casino Statements

Client brings in several W-2G's, totaling $10,000.

"But I didn't make anything..."

Client gives you the casino's statement showing:
Cash In $30,000
Cash Out $20,000, which includes the $10,000 W-2G's.

You have to show the $20,000 on line 21, itemize deductions with $20,000 in gambling expenses.

Due to income level of taxpayer, AMT applies and the $20,000 expense is lost.

Correct handling on the return?

If not, how do you justify not reporting the other $10,000 on the casino's statement?

[Black Bart]

Kind of refreshing too.

The text, written in plain English, and the decision, rendered in accordance with the facts presented, speak well for the integrity and intelligence of those on the bench.

On the one hand it's (as the PC types like to say) "disturbing" that the IRS wouldn't just investigate the case a bit and conclude that the guy had lost his shirt, his life's in the toilet (annual payment not withstanding), and is blowing every last cent he has or will ever get. But the more I see of IRS tactics, the more it seems that absolutely nothing matters to them except getting the money and never mind how/what the circumstances.

I've never been to Tax Court, but if I ever had to, it's reassuring to find that such judges exist and that they deliberate with common sense, putting the IRS on notice that they can't just come to court saying "He's lying and we want his money."

P.S. Great post, taxmandan