vpFREE2 Forums

1099s versus W2Gs for tournaments - my experience

#1

Does anybody know more information about video poker case, where the
judge
said there is no difference whether something is 1099 or W2-g
reported?

If audited, you will have to decide whether to give in or fight

through the

appeals process for subjects such as using "gaming session

wins/losses", 1099s

for Gambling Income, and so on. Unfortunately gambling IRS laws

were

written many years ago, before so many people got W2Gs, before

gambling was so

widespread, before inflation and changes in the tax code. The

many grey areas

of gambling are not covered by tax law or even tax court cases.

The major

weapon you have is keeping excellent records and being willing to

suffer through

the stress and hassle of any audits.

Whenever sending documents to the IRS, by the way, make sure you

keep

copies!! As I said, the IRS lost some responses (and ignored

some stuff too). Be

vigilent!

Best regards!

There are tax court cases - there is Libutti which addressed the
1099 issue - because most slot tournaments are by invitation only
based on your prior gambling, you should have qualified for
the "nexus" to gambling the Tax Court in Libutti cited. There is a
more recent case just decided in a video poker case, where the judge
said there is no difference whether something is 1099 or W2-g
reported.

Your problem was the you represented yourself. Anyone playing enough
money through to qualify for 7* should be able to afford a tax
attorney. You would have gotten much different treatment in my view,
if you were represented by counsel, maybe it would be negative EV,
but rather than have an excessive entanglement with the IRS, the
lawyer would handle it.

Do you really think the low paid low level employees you were
dealing with are even familiar with the Libutti case? I doubt it. If
you live in Nevada you and other residents should be lobbying Harry
Reid to get these antiquated laws updated. Reid as Majority Leader
is an a position to push through what are on a national scale minor
changes in the law - just indexing W2-Gs to inflation, would make
the threshold over $7,000 not $1,200.

--- End forwarded message ---

···

--- In vpFREE@yahoogroups.com, "caplatinum" <belairgold@...> wrote:
--- In vpFREE@yahoogroups.com, misscraps@ wrote:

#2

vegascurt wrote:

Does anybody know more information about video poker case, where the
judge said there is no difference whether something is 1099 or W2-g
reported?

The case involved someone who played tournament poker and filed
analogous to a sports professional.

T.C. Memo. 2007-38
UNITED STATES TAX COURT
GEORGE E. AND GLORIA TSCHETSCHOT, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 9498-03. Filed February 20, 2007.

The finding in the case included the following footnote:

"Similarly, a casino's decision to issue a Form W2-G,
Certain Gambling Winnings, or a Form 1099-Misc., Miscellaneous
Income, does not affect the nature of the winnings for tax
purposes."

It could be reasoned that this logic would suggest that one might
reasonably include other gambling related 1099-Misc income (such as
slot tournaments) as a component of reported Gambling Winnings (which
then would be eligible for offset against Gambling Losses).

However, it should be noted that tax court findings do not serve as
precedent for other findings and another judge is under no constraint
to rule similarly.

Link to the Tax Court finding:
http://www.ustaxcourt.gov/InOpHistoric/Tschetschot.TCM.WPD.pdf

- Harry

#3

Harry,
   
  Thanks for the information. This seems to go along with how others do it on the board. I guess my question now is that when I enter all of the information on my tax software, it distinguishes between where the 1099 info and W2G information are to be entered and the tax software says there is an error and says that my losses are greater than my winnings even though my winnings + W2Gs + 1099-Miscs = my losses. The problem seems to be the 1099 information from Box 3 is not in the gambling winnings section so I think the software thinks that I am trying to deduct losses greater than my winnings.
   
  Any suggestions on this?
   
  Curt

          vegascurt wrote:

Does anybody know more information about video poker case, where the
judge said there is no difference whether something is 1099 or W2-g
reported?

The case involved someone who played tournament poker and filed
analogous to a sports professional.

T.C. Memo. 2007-38
UNITED STATES TAX COURT
GEORGE E. AND GLORIA TSCHETSCHOT, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 9498-03. Filed February 20, 2007.

The finding in the case included the following footnote:

"Similarly, a casino's decision to issue a Form W2-G,
Certain Gambling Winnings, or a Form 1099-Misc., Miscellaneous
Income, does not affect the nature of the winnings for tax
purposes."

It could be reasoned that this logic would suggest that one might
reasonably include other gambling related 1099-Misc income (such as
slot tournaments) as a component of reported Gambling Winnings (which
then would be eligible for offset against Gambling Losses).

However, it should be noted that tax court findings do not serve as
precedent for other findings and another judge is under no constraint
to rule similarly.

Link to the Tax Court finding:
http://www.ustaxcourt.gov/InOpHistoric/Tschetschot.TCM.WPD.pdf

- Harry

···

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

#4

Curt Hitchcock wrote:

Thanks for the information. This seems to go along with how others
do it on the board. I guess my question now is that when I enter all
of the information on my tax software, it distinguishes between where
the 1099 info and W2G information are to be entered and the tax
software says there is an error and says that my losses are greater
than my winnings even though my winnings + W2Gs + 1099-Miscs = my
losses. The problem seems to be the 1099 information from Box 3 is
not in the gambling winnings section so I think the software thinks
that I am trying to deduct losses greater than my winnings.
   
Any suggestions on this?

No doubt that's the problem source. I don't have anything to offer.
I believe at least one other person in this group has discussed
confront this problem. You may wish to review the message base.

I'll note that I'm not personally advising you to offset the 1099 with
gambling losses. It risks that your return will be flagged for a
mismatch on reported 1099 income and what you've reported as
miscellaneous income (rather than gambling income). That may require
some follow up explanation and potentially be challenged. It's worth
considering attachment of a statement of explanation (in which you
clarify that related gambling activity was required for participation
in the event) in hope of shortcutting any misinterpretation.

If your filing method on this is reviewed and rejected, I think worse
case is that you'll have to pony up some interest. My general
experience is that any penalties that might be initially be applied
will be fully abated once your explanation for the filing demonstrates
that you filed in earnest. Thus, I don't deem this a bad route to
take (but it has its risks).

- Harry