vpFREE2 Forums

1099's From Tournaments

#1

In a message dated 12/15/2005 9:21:46 AM Pacific Standard Time,
dipy911@yahoo.com writes:

Most of these tournys are based on past play. You gambled to get the
offers. Therefore, it would be a gambling win.

I second the opinion on this one. We've all seen clips of unknowing persons
walking through some turnstile and balloons go off, etc. marking them as the
1,000,000 customer and the recipient of many prizes.

For the advantage player, these promotional invites are the direct result of
our play and profile as to who gets what. The 1099's are taxable.

The drawings, likewise, which are related to the handle you played (and maybe
lost!) to get entries are usually documented with a 1099. They, too, come
under winnings.

An exception, IMHO, occurred at the Palms at a recent cash drawing at a VIP
tournament. The prizes were not cash in pocket but rather money credit to a
machine of your choice. That meant, of course, that the money had to be played
through once before cashing out.

In this case, no 1099 was issued and these monies I believe are NOT
considered winnings.

I have been filing as a professional gambler under Sch C since about 1995. I
do push the envelope on some of these issues. My latest move is a
"carryover" of losses to the next year.

I accepted that even under Sch C you may not deduct gaming losses in excess
of winnings for any given calendar year. However, since you are claiming a
"business" of which at least 3 of 5 years must show a gain, I saw no reason
prohibiting carrying over losses to the next year which had more than usual gains.

I'm getting off topic but hope this helps.

Anteroz

[Non-text portions of this message have been removed]

#2

<<I have been filing as a professional gambler under Sch C since about 1995. I
do push the envelope on some of these issues. My latest move is a
"carryover" of losses to the next year.

I accepted that even under Sch C you may not deduct gaming losses in excess
of winnings for any given calendar year. However, since you are claiming a
"business" of which at least 3 of 5 years must show a gain, I saw no reason
prohibiting carrying over losses to the next year which had more than usual gains.>>

anterozlv: Good luck on this strategy. And you will need it! :slight_smile: I don't wish you an audit, of course, but if you do happen to get "called" on this, it would be helpful if you told us the results.

Whenever I read about how a gambling business can not do the things another kind of businesses can do, I think I think of the old saw: "You can't be just a little pregnant." Obviously in the IRS eyes you can be!!

···

________________________________________
Jean $�ott - http://www.FrugalGambler.biz
  for VP software and strategy cards.
  NEW - Blackjack Strategy Cards +
              Updated Second Edition of
             "The Frugal Gambler."

#3

anterozlv wrote:

I have been filing as a professional gambler under Sch C since about
1995. I do push the envelope on some of these issues. My latest
move is a "carryover" of losses to the next year.

I accepted that even under Sch C you may not deduct gaming losses in
excess of winnings for any given calendar year. However, since you
are claiming a "business" of which at least 3 of 5 years must show a
gain, I saw no reason prohibiting carrying over losses to the next
year which had more than usual gains.

An internet search surfaced a Card Player article which suggests that
the Tax Court specifically doesn't support this interpretation and
doesn't permit a profressional gambler to report a net loss in a given
year.

Your statement is a little puzzling. Short of deducting gaming losses
in excess of winnings and reporting a net loss for a year (you suggest
you accept the restriction from doing this), it's difficult to see how
you can file a return in a subsequent year that carries forward a loss
not previously reported.

It would appear that your Sch C reporting in the subsequent year may
fail to clearly reveal that you are deducting prior year excess
losses. If so, you risk exposure to adverse action under an
interpretation that you willingly filed a misleading return. If the
amounts involved are substantial to any degree, it might be in your
best interest to consult an appropriate tax consultant.

Want to File Your Taxes as a Professional Gambler?
by Yolanda Smulik-Roche Roche

http://tinyurl.com/drvlh

The relevent text is:

If you meet these criteria, you can consider yourself a professional
gambler and report your gambling activity on a Schedule C, Profit or
Loss From Business, and deduct gambling-related expenses. There is a
limit to the amount of expenses that you can deduct. The IRS considers
these expenses to be gambling losses, and the rule that gambling
losses cannot exceed gambling winnings still applies. If this is true
for you, you must show a net profit of zero. You cannot claim a net
loss. This has been the subject of a number of Tax Court cases in
which professional gamblers have challenged this rule. These
professional gamblers argued that since other types of businesses can
claim a net loss, those in the business of gambling (professional
gamblers) should also be allowed to claim a net loss. Their arguments
invariably were based on the "equal protection under the law"
doctrine, but were to no avail. In every case to date, the Tax Court
ruled in favor of the IRS.

- H.

#4

.

An exception, IMHO, occurred at the Palms at a recent cash drawing

at a VIP

tournament. The prizes were not cash in pocket but rather money

credit to a

machine of your choice. That meant, of course, that the money had

to be played

through once before cashing out.

In this case, no 1099 was issued and these monies I believe are NOT
considered winnings.

I may very well be too cautious, but it seems to me that profits from
all forms of Free Play probably should be considered wins for tax
purposes. For example if I have a $50 Free Play at Palms and I play
it through once and cash out $40, I record this session as $0 in and
$40 out with a notation that play was a result of Free Play. On
multiple occasions I have hit royal flushes while playing on Free
Play. Should I be able to exclude these wins from my taxes because
of where the credits originated?

···

--- In vpFREE@yahoogroups.com, anterozlv@a... wrote:

#5

--- In vpFREE@yahoogroups.com, "vegasvpplayer" <vegasvpplayer@j...>
wrote:

I may very well be too cautious, but it seems to me that profits from
all forms of Free Play probably should be considered wins for tax
purposes. For example if I have a $50 Free Play at Palms and I play
it through once and cash out $40, I record this session as $0 in and
$40 out with a notation that play was a result of Free Play. On
multiple occasions I have hit royal flushes while playing on Free
Play. Should I be able to exclude these wins from my taxes because
of where the credits originated?

While I never had the pleasure of hitting a Royal while on free play
("only" deuces a few times)...this does raise an interesting question.
Are the dollars "won" on free play considered to be taxable income?

We know that comps (food, room, shows, etc.) are not considered to be
taxable...but what about the free play? or bounce back cash for that
matter?

Anyone been audited recently?

Don the Dentist (audit free, and hoping to stay that way)

#6

While I never had the pleasure of hitting a Royal while on free play
("only" deuces a few times)...this does raise an interesting

question.

Are the dollars "won" on free play considered to be taxable income?

I hope I'm there when you hit your first royal on Free Play. I want to
see the dazed look on the casino employees' faces when you instuct them
not to issue you a W-2G since the hit was on Free Play and therefore
not subject to taxation. :slight_smile:

···

--- In vpFREE@yahoogroups.com, "dds2124" <dds6@c...> wrote:

#7

<<I hope I'm there when you hit your first royal on Free Play. I want to
see the dazed look on the casino employees' faces when you instuct them
not to issue you a W-2G since the hit was on Free Play and therefore
not subject to taxation. :-)>>

I keep track of Free Play separately when it arrives in the mail or whenever we get it. But when we play it off, it becomes part of our bankroll. (Others may do it differently - the IRS doesn't give specific instructions about this so people do it many different ways! Some people don't include Free Play in their "income" - some do! Some only include what they actually have left after they play it through once. Others mostly play it until it is all gone and they claim no "income.")

Let me give you a fun example that happened to Brad last night at the Hard Rock. We had picked up $30 in Free Play cards that I had put in my records under Free Play. He put that $30 in a $5 machine and feed in $470 cash so he was starting his play with $500 - we were going to put about 125 points on each card. About 10 hands later he was dealt a $20,000 royal. (Always a shock when the machine locks up on you!) We played a little while longer, until we got our points. We cashed out $1000 (Brad stayed hot!). So in my records I put a $20,500 win for that session.

This has been a struggling year for us in VP but since we are only going to play a couple more times, I think this royal will assure us a win for the year!!!! A monetary win, I refer to. We count comps as "gravy." Although $20-$30,000 a year in comps is pretty rich gravy!!!!

We never did intend to make money gambling; we just wanted to live like millionaires. But over the years we "accidentally" have been able to do both.

···

________________________________________
Jean $�ott - http://www.FrugalGambler.biz
  for VP software and strategy cards.
  NEW - Blackjack Strategy Cards +
              Updated Second Edition of
             "The Frugal Gambler."

#8

Congratulations on the royal! I am curious what game Brad was
playing. I am certain that you had an advantage, but according to
vpfree the Hard Rock's best game is quarter JB.

--- In vpFREE@yahoogroups.com, "Jean Scott" <QueenofComps@f...>
wrote:

<<> Let me give you a fun example that happened to Brad last night

at the Hard

Rock. We had picked up $30 in Free Play cards that I had put in

my records

under Free Play. He put that $30 in a $5 machine and feed in $470

cash so

he was starting his play with $500 - we were going to put about

125 points

on each card. About 10 hands later he was dealt a $20,000 royal.

(Always a

shock when the machine locks up on you!) We played a little while

longer,

until we got our points. We cashed out $1000 (Brad stayed hot!).

So in my

records I put a $20,500 win for that session.

This has been a struggling year for us in VP but since we are only

going to

play a couple more times, I think this royal will assure us a win

for the

year!!!! A monetary win, I refer to. We count comps

as "gravy." Although

$20-$30,000 a year in comps is pretty rich gravy!!!!

We never did intend to make money gambling; we just wanted to live

like

millionaires. But over the years we "accidentally" have been able

to do

···

both.
________________________________________
Jean $¢ott - http://www.FrugalGambler.biz
  for VP software and strategy cards.
  NEW - Blackjack Strategy Cards +
              Updated Second Edition of
             "The Frugal Gambler."

#9

I have been out of town for 9 days and am just now getting to catch up on e-mail so some of my responses are to "old" posts.

<<Congratulations on the royal! I am curious what game Brad was
playing. I am certain that you had an advantage, but according to
vpfree the Hard Rock's best game is quarter JB.>>

Hard Rock had been giving very strong BB amounts to local players - we were playing $5 8/5 Bonus, which with BB and CB made it a very good play. This may not continue as it seems like they are starting to cut back on the BB amounts.

···

________________________________________
Jean $�ott - http://www.FrugalGambler.biz
  Tax time is coming up - groan! "Tax Help
   for the Frugal Gambler" can answer many
   of your questions!