Nyea

[Black Bart]

Are you anywhere around?

[New York Enrolled Agent]

Are you anywhere around?

I'm here. Just returned from Mohegan Sun casino in CT. Unfortunately, no W-2G forms.

[Gary]

Winnings

But did you have any winnings? Don't forget to report them.

Just a joke.

[Black Bart]

I was

going to ask you to read the "Self-employed health insurance" thread below and weigh in on the question of whether or not Medicare qualified for it, but thinkin' it over I concede that Bees (says no) is probably right.

Solomon got an email from an IRS employee (says yes) citing a non-IRS source and Sol doesn't think it's right. Jiggers pointed out that the email clearly said it can be used, but it also seems clear that the IRS rep misunderstood his source and passed it on as gospel.

Actually, I see more and more of this from IRS and it's disheartening to realize you can't even trust the opinion of the authorities. I got one last year -- a pre-printed form letter containing a blank spot filled-in with a wrong answer that looked to have been written by a third-grader. Those opinions used to be gold, but standards are so low now that we apparently can't put much stock in low-level communications.

Anyway, if you get time, take a look and tell us what you think. Thanks.

[erchess]

In the 1980s

long before I thought of going into this business I heard by word of mouth from various students who were taking Accounting that the IRS had itself done a study and concluded that when it answered tax questions for the public it gave the wrong answer one time in three.

I have like two or three times helped taxpayers get their EIC or avoid having to give it back when someone at the IRS was treating a pension rollover as investment income.

[David1980]

Unless it's a revenue ruling I treat it as just an opinion of someone else working in the same industry and nothing more. However, sometimes you get people who are great at giving you revenue rulings and proper citations.

If I'm on the fence on something I may ask and if I get the answer I hoped for I'll go for it even though I'm still not sure.

[Black Bart]

This is where it really gets tough

...If I'm on the fence on something I may ask and if I get the answer I hoped for I'll go for it even though I'm still not sure.

My client and I want and need the deduction; it's tempting, audit risk is remote, another tax preparer advised my client it's allowed (putting pressure on me), and now we have "official" sanction, but...in my bones I think I know the correct answer (if it favors middle class T/Ps with no court precedent, IRS is usually against it). I'm no puritan, have done such before, and will again if necessary, but doing the right thing's hard when you're swimming upstream against the powers that be.

IRS hires incompetent dopes to advise tax pros while lax enforcement undercuts us and "vindicates" the shoddy work of shady characters who usually aren't audited. Aggressively-deducting clients who do get audited insist "I absolutely wanted to pay the right amount of taxes I owe" (yeah, right!).

Meanwhile, Congress authorizes staggering giveaways ($5K EITC is available for simply telling a lie) and then levies heavy preparer penalties for our lack of "due diligence." Apparently the Congressional thinking is: "We've got to put nincompoops on the payroll and do social work through the tax code or we'll look bad to constituents -- problem is, it's breaking the bank. Why not force tax preparers to stop the bleeding and they can be the bad guys instead of us?"

It's like the bailout -- the other day Barney Frank was demanding to know who was responsible for the financial fiasco. Then a congressman pointed out that Frank and an associate had for years been pressuring, intimidating, and arm-twisting Fannie Mae and Freddie Mac to make politically correct bad loans to people who couldn't afford them. I used to think when people lost their houses, it was their problem. But those guys were actually just paying cheap rent for a nice house until the music stopped -- turns out the taxpayers are taking the hit instead.

[snowbird]

Interesting about the quality of IRS assistance. As you can see from my profile, I am an EA … have a BS and MS … and retired. A couple of years ago, I found an IRS seasonal customer service job (cannot remember the exact title) in the area we were going to for the winter. I put in my application … didn’t even get an interview.

[New York Enrolled Agent]

But did you have ANY winnings? Don't forget to report them.

Just a joke.

Actually, you bring up a very interesting question. Suppose I sat down at a $10 blackjack table and put down $200. I play for 5 hours and use my strategy of splitting & doubling and yada, yada and "win" many times during the day for gross winnings of $1585. Of course, I also "lose" on many hands with gross losses of $1600. I finish the day and get up from the table with $185. How do I report this? Did I win $1,585 (reportable on line 21) with losses of $1,600 (reportable on Schedule A) or did I lose $15 for the day with nothing to report??? Not much guidance on this one!

Some practitioners argue that when a taxpayer brings in their slot activity report from a casino that shows all the "wins" and "losses" during the day, that they are obligated to report ALL the winnings. Like I said - an interesting question.

At the IRS Forums, I brought this up to lawyers from Chief Counsel's office who had a table and were asking for items that needed guidance. They told me that they were working on this and guidance would be issued "soon".

Bart
I wish I could give you a definitive answer but I don't think there is one without an official IRS response. The courts tell us that the response Solomn received is not binding on the IRS. The history starting with FSA 3042 was originally bleak for a deduction. Then CCA 200524001 gave some more hope (though as some correctly argue still no definitive answer). I've read some practitioners who assert that Notice 2008-1 gives further hope for a deduction. Bottom line - you might want to use a Form 8275 if you take this deduction.

[joanmcq]

"It's like the bailout -- the other day Barney Frank was demanding to know who was responsible for the financial fiasco. Then a congressman pointed out that Frank and an associate had for years been pressuring, intimidating, and arm-twisting Fannie Mae and Freddie Mac to make politically correct bad loans to people who couldn't afford them. "

Actually, the pressure was to stop 'redlining' which was the practice of not loaning at all in certain neighborhoods, or the blatant discrimiation found where certain taxpayers of one hue with the exact same credentials, credit scores, down payments, income, etc. were rejected where as taxpayers of another hue were not. The loosening of the credit standards was a differnt issue entirely.

[Black Bart]

Okay,

Actually, the pressure was to stop 'redlining' which was the practice of not loaning at all in certain neighborhoods, or the blatant discrimiation found where certain taxpayers of one hue with the exact same credentials, credit scores, down payments, income, etc. were rejected where as taxpayers of another hue were not. The loosening of the credit standards was a differnt issue entirely.

I yield. Obviously we need to make more loans in bad neighborhoods.