Hi everyone,
For the first time we've had the good fortune to win a slot tournament
for which a 1099 form was issued. We've heard conflicting reports as
to whether you can deduct your gambling losses against this win. Any
help on this matter would be appreciated.
Thanks.
It depends...best to get in contact with a CPA or EA who has experience filing gaming related tax returns.
Don the Dentist
--- In vpFREE@yahoogroups.com, Dean Nishijima <midorinish@...> wrote:
Hi everyone,
For the first time we've had the good fortune to win a slot tournament
for which a 1099 form was issued. We've heard conflicting reports as
to whether you can deduct your gambling losses against this win. Any
help on this matter would be appreciated.Thanks.
You can deduct losses on Schedule A, or file as a professional gambler with Schedule C.
Might be able to use "Session wins" rather than 1099s as you wins, but I hear conflicting info on this board.
See http://groups.yahoo.com/group/vpFREE/message/104962 for some problems with Schedule C.
http://www.readybetgo.com/book-reviews/review-606.html
How To Turn Poker Playing Into a Business (Knowing What to Deduct to Improve Your Odds With the IRS) by Ann-Margaret Johnston (122 pages, paperbound, $19.95) and The Tax Guide for Gamblers by Roger and Yolanda Roche -- Sixth Edition (64 pages, paperbound, $29.95). Both are excellent references and both are available at Gambler's Book Shop in Las Vegas.
http://www.casinogaming.com/features/taxlaws.html
All winnings from all forms of gambling are taxable and must be declared as income on your tax return.
All losses from all forms of gambling are deductible as an itemized deduction for recreational players, limited to the amount of winnings declared.
Professional gamblers hold file as a self-employed business using Schedule C.
The value of "comps" received are considered to be gaming winnings and should be included in your total winnings. This does allow you to deduct gaming losses to offset the income from the "comps."
Wins and losses are reported only in the year they occur. Excess losses cannot be carried forward or back to offset winnings in other years.
Married couples filing a joint return must combine their winnings and combine their losses, and report only one figure for each.
The IRS has issued instructions that "lumping" is unacceptable. "Lumping" is the practice of reporting one net win figure and no losses, or reporting nothing if your net from gambling is a loss. You must report the total of your winning sessions separately from the total of your losing sessions.
The IRS requires that an accurate diary or similar record must be maintained for substantiating your wins and losses, and that the diary should contain at least the following information: (1) the date and type of your specific wager; (2) the name of the gaming establishment; (3) the address or location of the gaming establishment; (4) the names of the other person(s), if any, present with you; (5) the amount(s) you won or lost.
The IRS also requires that in order to substantiate your diary, supplemental records are required, including the following (these records are not to be submitted with your return, but will be needed should you be audited): (1) W-2Gs; (2) wagering tickets or receipts; (3) canceled checks; (4) credit card records such as cash advances; (5) bank withdrawals; (6) any receipts provided by the gambling establishment.
KEEP RECORDS OF YOUR GAMBLING TRANSACTIONS
In February of 1998, in a case involving an unemployed gambler who failed to file timely returns for two years and kept no records, the Tax Court ruled that the gambler could not deduct unsubstantiated gambling losses. In addition the Tax Court upheld the IRS which had levied additional amounts for failure to file on time and for the accuracy-related negligence penalty. This increased the gambler's tax liability by 43%!
In other words, they threw the book at this gambler, who actually told the court that although he maintained a gambling log for one of the years in question, it was not accurate because it was too time-consuming to make it precise.
If you are collecting W2-Gs and not keeping accurate records, this very well could be in your future.
<many more details on the webpage>
http://www.irs.gov/taxtopics/tc419.html
You may deduct gambling losses only if you itemize deductions. Claim your gambling losses as a miscellaneous deduction that is not subject to the 2% limit on Form 1040, Schedule A (PDF). However, the amount of losses you deduct may not be more than the amount of gambling income reported on your return. It is important to keep an accurate diary or similar record of your gambling winnings and losses. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses. Refer to Publication 529, Miscellaneous Deductions, for more information.
I would like to know of anyone has tried to use daily session win VS using
the W2G as income. It seems to me this is a more fair way to report gambling
income but maybe the IRS doesn't look at it that way. Unfortunately, a
taxpayer who has any substantial W2G receipts and has equal losses is in the
end paying more income tax.
The Gambler
_____
From: vpFREE@yahoogroups.com [mailto:vpF…@…com] On Behalf Of
tsaimitch
Sent: Tuesday, February 09, 2010 1:51 PM
To: vpFREE@yahoogroups.com
Subject: [vpFREE] Re: 1099's
You can deduct losses on Schedule A, or file as a professional gambler with
Schedule C.
Might be able to use "Session wins" rather than 1099s as you wins, but I
hear conflicting info on this board.
See http://groups.yahoo.com/group/vpFREE/message/104962>
yahoo.com/group/vpFREE/message/104962 for some problems with Schedule C.
http://www.readybetgo.com/book-reviews/review-606.html>
go.com/book-reviews/review-606.html
How To Turn Poker Playing Into a Business (Knowing What to Deduct to Improve
Your Odds With the IRS) by Ann-Margaret Johnston (122 pages, paperbound,
$19.95) and The Tax Guide for Gamblers by Roger and Yolanda Roche -- Sixth
Edition (64 pages, paperbound, $29.95). Both are excellent references and
both are available at Gambler's Book Shop in Las Vegas.
http://www.casinogaming.com/features/taxlaws.html>
ming.com/features/taxlaws.html
All winnings from all forms of gambling are taxable and must be declared as
income on your tax return.
All losses from all forms of gambling are deductible as an itemized
deduction for recreational players, limited to the amount of winnings
declared.
Professional gamblers hold file as a self-employed business using Schedule
C.
The value of "comps" received are considered to be gaming winnings and
should be included in your total winnings. This does allow you to deduct
gaming losses to offset the income from the "comps."
Wins and losses are reported only in the year they occur. Excess losses
cannot be carried forward or back to offset winnings in other years.
Married couples filing a joint return must combine their winnings and
combine their losses, and report only one figure for each.
The IRS has issued instructions that "lumping" is unacceptable. "Lumping" is
the practice of reporting one net win figure and no losses, or reporting
nothing if your net from gambling is a loss. You must report the total of
your winning sessions separately from the total of your losing sessions.
The IRS requires that an accurate diary or similar record must be maintained
for substantiating your wins and losses, and that the diary should contain
at least the following information: (1) the date and type of your specific
wager; (2) the name of the gaming establishment; (3) the address or location
of the gaming establishment; (4) the names of the other person(s), if any,
present with you; (5) the amount(s) you won or lost.
The IRS also requires that in order to substantiate your diary, supplemental
records are required, including the following (these records are not to be
submitted with your return, but will be needed should you be audited): (1)
W-2Gs; (2) wagering tickets or receipts; (3) canceled checks; (4) credit
card records such as cash advances; (5) bank withdrawals; (6) any receipts
provided by the gambling establishment.
KEEP RECORDS OF YOUR GAMBLING TRANSACTIONS
In February of 1998, in a case involving an unemployed gambler who failed to
file timely returns for two years and kept no records, the Tax Court ruled
that the gambler could not deduct unsubstantiated gambling losses. In
addition the Tax Court upheld the IRS which had levied additional amounts
for failure to file on time and for the accuracy-related negligence penalty.
This increased the gambler's tax liability by 43%!
In other words, they threw the book at this gambler, who actually told the
court that although he maintained a gambling log for one of the years in
question, it was not accurate because it was too time-consuming to make it
precise.
If you are collecting W2-Gs and not keeping accurate records, this very well
could be in your future.
<many more details on the webpage>
http://www.irs.gov/taxtopics/tc419.html>
gov/taxtopics/tc419.html
You may deduct gambling losses only if you itemize deductions. Claim your
gambling losses as a miscellaneous deduction that is not subject to the 2%
limit on Form 1040, Schedule A (PDF). However, the amount of losses you
deduct may not be more than the amount of gambling income reported on your
return. It is important to keep an accurate diary or similar record of your
gambling winnings and losses. To deduct your losses, you must be able to
provide receipts, tickets, statements or other records that show the amount
of both your winnings and losses. Refer to Publication 529, Miscellaneous
Deductions, for more information.
[Non-text portions of this message have been removed]
You may deduct gambling losses only if you itemize deductions. Claim your gambling losses as a miscellaneous deduction that is not subject to the 2% limit on Form 1040, Schedule A (PDF). However, the amount of losses you deduct may not be more than the amount of gambling income reported on your return. It is important to keep an accurate diary or similar record of your gambling winnings and losses. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses. Refer to Publication 529, Miscellaneous Deductions, for more information.
--- On Tue, 2/9/10, Don the Dentist <dds6@cox.net> wrote:
From: Don the Dentist <dds6@cox.net>
Subject: [vpFREE] Re: 1099's
To: vpFREE@yahoogroups.com
Date: Tuesday, February 9, 2010, 10:28 AM
It depends...best to get in contact with a CPA or EA who has experience filing gaming related tax returns.
Don the Dentist
--- In vpFREE@yahoogroups. com, Dean Nishijima <midorinish@ ...> wrote:
Hi everyone,
For the first time we've had the good fortune to win a slot tournament
for which a 1099 form was issued. We've heard conflicting reports as
to whether you can deduct your gambling losses against this win. Any
help on this matter would be appreciated.Thanks.
[Non-text portions of this message have been removed]
I don't think this is correct. My understanding is that comps are not taxable. Where did you get this information from?
Don the Dentist
--- In vpFREE@yahoogroups.com, "tsaimitch" <tsai@...> wrote:
The value of "comps" received are considered to be gaming winnings and should be included in your total winnings. This does allow you to deduct gaming losses to offset the income from the "comps."
I think the responders may be missing the question, which was about a 1099, not about a W-2G.
A W-2G is the form you receive for "Certain Gaming Winnings"
A 1099 is for Miscellaneous Income.
Not all 1099s from casinos are eligible to have gaming losses taken against them, when submitting your tax return.
For example, if you swipe your players card at Casino A and get entered into a drawing and win...then no gaming took place and most likely the 1099 would not be eligible to have gaming losses taken against the winnings. That contest could be considered a lottery, since there was no condition that gambling must have taken place to be eligible for the drawing.
This is a very gray area, which is why I recommended consulting with a CPA or EA who specializes in gaming.
Don the Dentist
--- In vpFREE@yahoogroups.com, NC Wanderer <larbo929@...> wrote:
You may deduct gambling losses only if you itemize deductions. Claim your gambling losses as a miscellaneous deduction that is not subject to the 2% limit on Form 1040, Schedule A (PDF). However, the amount of losses you deduct may not be more than the amount of gambling income reported on your return. It is important to keep an accurate diary or similar record of your gambling winnings and losses. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses. Refer to Publication 529, Miscellaneous Deductions, for more information.
--- On Tue, 2/9/10, Don the Dentist <dds6@...> wrote:
It depends...best to get in contact with a CPA or EA who has experience filing gaming related tax returns.Don the Dentist
--- In vpFREE@yahoogroups. com, Dean Nishijima <midorinish@ ...> wrote:
>
> Hi everyone,
>
> For the first time we've had the good fortune to win a slot tournament
> for which a 1099 form was issued. We've heard conflicting reports as
> to whether you can deduct your gambling losses against this win. Any
> help on this matter would be appreciated.
>
> Thanks.
>[Non-text portions of this message have been removed]
Jan: Since I started filing as a recreational gambler some years ago I used the session method and was never audited. I reported based on the session length of a day because of the "churn" of the machines. To me the bigger question is the precise definition of a session.
When I started betting significant money and filed as a professional with schedule C, I continued using the session method. Given that the Casino supplies the total of my accrued W2G's, I have used the daily session method because it agrees with the W2G submission. I do have complete contemporary records of all $1200.+ wins from the attachments of the Casino W2's which can be tied back through time of day of the "hit" to my records. I survived the 2006 audit about using Scedule C but what never directly asked about session method or length. As I have reported here and you responded I have faced the same issues for the 2007 year and I, my accountant and my lawyer will fill out paper work to to request the matter be taken to tax court. Whether the session method or session length comes up at that time I do not know, we are prepared to defend it and its length. Of course whether I win or lose will be not known for some lengthy period. Denny
--- In vpFREE@yahoogroups.com, "Jan Spornhauer" <janspornhauer@...> wrote:
I would like to know of anyone has tried to use daily session win VS using
the W2G as income. It seems to me this is a more fair way to report gambling
income but maybe the IRS doesn't look at it that way. Unfortunately, a
taxpayer who has any substantial W2G receipts and has equal losses is in the
end paying more income tax.The Gambler
_____
From: vpFREE@yahoogroups.com [mailto:vpF…@…com] On Behalf Of
tsaimitch
Sent: Tuesday, February 09, 2010 1:51 PM
To: vpFREE@yahoogroups.com
Subject: [vpFREE] Re: 1099'sYou can deduct losses on Schedule A, or file as a professional gambler with
Schedule C.
Might be able to use "Session wins" rather than 1099s as you wins, but I
hear conflicting info on this board.See http://groups.yahoo.com/group/vpFREE/message/104962>
yahoo.com/group/vpFREE/message/104962 for some problems with Schedule C.http://www.readybetgo.com/book-reviews/review-606.html>
go.com/book-reviews/review-606.htmlHow To Turn Poker Playing Into a Business (Knowing What to Deduct to Improve
Your Odds With the IRS) by Ann-Margaret Johnston (122 pages, paperbound,
$19.95) and The Tax Guide for Gamblers by Roger and Yolanda Roche -- Sixth
Edition (64 pages, paperbound, $29.95). Both are excellent references and
both are available at Gambler's Book Shop in Las Vegas.http://www.casinogaming.com/features/taxlaws.html>
ming.com/features/taxlaws.htmlAll winnings from all forms of gambling are taxable and must be declared as
income on your tax return.All losses from all forms of gambling are deductible as an itemized
deduction for recreational players, limited to the amount of winnings
declared.Professional gamblers hold file as a self-employed business using Schedule
C.The value of "comps" received are considered to be gaming winnings and
should be included in your total winnings. This does allow you to deduct
gaming losses to offset the income from the "comps."Wins and losses are reported only in the year they occur. Excess losses
cannot be carried forward or back to offset winnings in other years.Married couples filing a joint return must combine their winnings and
combine their losses, and report only one figure for each.The IRS has issued instructions that "lumping" is unacceptable. "Lumping" is
the practice of reporting one net win figure and no losses, or reporting
nothing if your net from gambling is a loss. You must report the total of
your winning sessions separately from the total of your losing sessions.The IRS requires that an accurate diary or similar record must be maintained
for substantiating your wins and losses, and that the diary should contain
at least the following information: (1) the date and type of your specific
wager; (2) the name of the gaming establishment; (3) the address or location
of the gaming establishment; (4) the names of the other person(s), if any,
present with you; (5) the amount(s) you won or lost.The IRS also requires that in order to substantiate your diary, supplemental
records are required, including the following (these records are not to be
submitted with your return, but will be needed should you be audited): (1)
W-2Gs; (2) wagering tickets or receipts; (3) canceled checks; (4) credit
card records such as cash advances; (5) bank withdrawals; (6) any receipts
provided by the gambling establishment.KEEP RECORDS OF YOUR GAMBLING TRANSACTIONS
In February of 1998, in a case involving an unemployed gambler who failed to
file timely returns for two years and kept no records, the Tax Court ruled
that the gambler could not deduct unsubstantiated gambling losses. In
addition the Tax Court upheld the IRS which had levied additional amounts
for failure to file on time and for the accuracy-related negligence penalty.
This increased the gambler's tax liability by 43%!In other words, they threw the book at this gambler, who actually told the
court that although he maintained a gambling log for one of the years in
question, it was not accurate because it was too time-consuming to make it
precise.If you are collecting W2-Gs and not keeping accurate records, this very well
could be in your future.<many more details on the webpage>
http://www.irs.gov/taxtopics/tc419.html>
gov/taxtopics/tc419.htmlYou may deduct gambling losses only if you itemize deductions. Claim your
gambling losses as a miscellaneous deduction that is not subject to the 2%
limit on Form 1040, Schedule A (PDF). However, the amount of losses you
deduct may not be more than the amount of gambling income reported on your
return. It is important to keep an accurate diary or similar record of your
gambling winnings and losses. To deduct your losses, you must be able to
provide receipts, tickets, statements or other records that show the amount
of both your winnings and losses. Refer to Publication 529, Miscellaneous
Deductions, for more information.[Non-text portions of this message have been removed]
Denny, thanks for the information. I am trying to use 6:00 a. m. to 6:00 a.
m. as time period. To make sure that I understand, I perceive that you
report session income as follows: You play V/P let's say for 8 hours
beginning at 9:00 a. m. on two machines. Machine A - Cash in $ 2000 - TITO
= 0 Loss $ 2,000. Machine B Cash in $ 1,000 - TITO = $ !00 , $ 4,000 W2G
Hand Pay. Session win = $ 1,100 (4,000 - 2,000 - 900). If this was your only
gambling for year, you would report $ 1,100 as other income on 1040. There
would be no gambling losses reported. You may use different terminology but
is the session win calculation correct and the way you report your gambling
income.
Thanks
Jan
_____
From: vpFREE@yahoogroups.com [mailto:vpF…@…com] On Behalf Of
denflo60
Sent: Tuesday, February 09, 2010 9:42 PM
To: vpFREE@yahoogroups.com
Subject: [vpFREE] Re: 1099's
Jan: Since I started filing as a recreational gambler some years ago I used
the session method and was never audited. I reported based on the session
length of a day because of the "churn" of the machines. To me the bigger
question is the precise definition of a session.
When I started betting significant money and filed as a professional with
schedule C, I continued using the session method. Given that the Casino
supplies the total of my accrued W2G's, I have used the daily session method
because it agrees with the W2G submission. I do have complete contemporary
records of all $1200.+ wins from the attachments of the Casino W2's which
can be tied back through time of day of the "hit" to my records. I survived
the 2006 audit about using Scedule C but what never directly asked about
session method or length. As I have reported here and you responded I have
faced the same issues for the 2007 year and I, my accountant and my lawyer
will fill out paper work to to request the matter be taken to tax court.
Whether the session method or session length comes up at that time I do not
know, we are prepared to defend it and its length. Of course whether I win
or lose will be not known for some lengthy period. Denny
--- In vpFREE@yahoogroups. <mailto:vpFREE%40yahoogroups.com> com, "Jan
Spornhauer" <janspornhauer@...> wrote:
I would like to know of anyone has tried to use daily session win VS using
the W2G as income. It seems to me this is a more fair way to report
gambling
income but maybe the IRS doesn't look at it that way. Unfortunately, a
taxpayer who has any substantial W2G receipts and has equal losses is in
the
end paying more income tax.
The Gambler
_____
From: vpFREE@yahoogroups. <mailto:vpFREE%40yahoogroups.com> com
[mailto:vpFREE@yahoogroups. <mailto:vpFREE%40yahoogroups.com> com] On Behalf
Of
tsaimitch
Sent: Tuesday, February 09, 2010 1:51 PM
To: vpFREE@yahoogroups. <mailto:vpFREE%40yahoogroups.com> com
Subject: [vpFREE] Re: 1099'sYou can deduct losses on Schedule A, or file as a professional gambler
with
Schedule C.
Might be able to use "Session wins" rather than 1099s as you wins, but I
hear conflicting info on this board.See http://groups.
<http://groups.yahoo.com/group/vpFREE/message/104962>
yahoo.com/group/vpFREE/message/104962>
yahoo.com/group/vpFREE/message/104962 for some problems with Schedule C.
<http://www.readybetgo.com/book-reviews/review-606.html>
go.com/book-reviews/review-606.html>
go.com/book-reviews/review-606.html
How To Turn Poker Playing Into a Business (Knowing What to Deduct to
Improve
Your Odds With the IRS) by Ann-Margaret Johnston (122 pages, paperbound,
$19.95) and The Tax Guide for Gamblers by Roger and Yolanda Roche -- Sixth
Edition (64 pages, paperbound, $29.95). Both are excellent references and
both are available at Gambler's Book Shop in Las Vegas.
<http://www.casinogaming.com/features/taxlaws.html>
ming.com/features/taxlaws.html>
ming.com/features/taxlaws.html
All winnings from all forms of gambling are taxable and must be declared
as
income on your tax return.
All losses from all forms of gambling are deductible as an itemized
deduction for recreational players, limited to the amount of winnings
declared.Professional gamblers hold file as a self-employed business using Schedule
C.The value of "comps" received are considered to be gaming winnings and
should be included in your total winnings. This does allow you to deduct
gaming losses to offset the income from the "comps."Wins and losses are reported only in the year they occur. Excess losses
cannot be carried forward or back to offset winnings in other years.Married couples filing a joint return must combine their winnings and
combine their losses, and report only one figure for each.The IRS has issued instructions that "lumping" is unacceptable. "Lumping"
is
the practice of reporting one net win figure and no losses, or reporting
nothing if your net from gambling is a loss. You must report the total of
your winning sessions separately from the total of your losing sessions.The IRS requires that an accurate diary or similar record must be
maintained
for substantiating your wins and losses, and that the diary should contain
at least the following information: (1) the date and type of your specific
wager; (2) the name of the gaming establishment; (3) the address or
location
of the gaming establishment; (4) the names of the other person(s), if any,
present with you; (5) the amount(s) you won or lost.The IRS also requires that in order to substantiate your diary,
supplemental
records are required, including the following (these records are not to be
submitted with your return, but will be needed should you be audited): (1)
W-2Gs; (2) wagering tickets or receipts; (3) canceled checks; (4) credit
card records such as cash advances; (5) bank withdrawals; (6) any receipts
provided by the gambling establishment.KEEP RECORDS OF YOUR GAMBLING TRANSACTIONS
In February of 1998, in a case involving an unemployed gambler who failed
to
file timely returns for two years and kept no records, the Tax Court ruled
that the gambler could not deduct unsubstantiated gambling losses. In
addition the Tax Court upheld the IRS which had levied additional amounts
for failure to file on time and for the accuracy-related negligence
penalty.
This increased the gambler's tax liability by 43%!
In other words, they threw the book at this gambler, who actually told the
court that although he maintained a gambling log for one of the years in
question, it was not accurate because it was too time-consuming to make it
precise.If you are collecting W2-Gs and not keeping accurate records, this very
well
could be in your future.
<many more details on the webpage>
gov/taxtopics/tc419.html>
gov/taxtopics/tc419.html
You may deduct gambling losses only if you itemize deductions. Claim your
gambling losses as a miscellaneous deduction that is not subject to the 2%
limit on Form 1040, Schedule A (PDF). However, the amount of losses you
deduct may not be more than the amount of gambling income reported on your
return. It is important to keep an accurate diary or similar record of
your
gambling winnings and losses. To deduct your losses, you must be able to
provide receipts, tickets, statements or other records that show the
amount
of both your winnings and losses. Refer to Publication 529, Miscellaneous
Deductions, for more information.[Non-text portions of this message have been removed]
[Non-text portions of this message have been removed]
Although there are a couple of other tax books available that give good
general information, I know of no other that gives as much specific
information for the machine player as "Tax Help for Gamblers." That's why
I wrote this book since I found other books very lacking, often seeming to
be written by people who had never gambled themselves. That's why I brought
Marissa Chien in with me for this book. She is a professional tax preparer
who has had a lot of experience with cases involving gamblers plus she is a
gambler herself, both in video poker and live poker.
Topics like 1099's, sessions, comps, professional status - there is no one
answer to how to handle these on your returns. We don't give short
flat-out answers - we discuss the range of possibilities, the pros and cons
of doing it any one way - and then you can decide how to do it according to
your particular circumstances if you do your own returns. And even if you
use a professional preparer, this book can help you become knowledgeable
enough to give that person all the necessary information for them to make a
better decision. And in many cases, especially if the preparer is not a
gambler himself and/or has not had any/much experience in this specific tax
arena, the taxpayer has given the book to him to help him begin his own
education here.
It is good to share personal tax experiences on this or other Internet forums but some of the "short advice" given may not be applicable to your circumstances and some may actually be downright wrong. There are so many ways to interpret the very unclear IRS writings on this subject that we have to be careful how we use "advice" we get from non-professionals. Even tax professionals don't always agree so it is not wise to be too "dogmatic."
You can learn more about the book at my Web site below. Also you can order
it as an e-Book at http://www.shoplva.com/collections/ebooks/ for $9.98.
This is the newly-updated 2010 edition.
________________
Jean $�ott, Frugal Gambler
http://queenofcomps.com/
You can read my blog at
http://jscott.lvablog.com/
Jean
I already have your book and recognize that IRS is very vague on what is
acceptable. I do think that I am going to try to use the session method of
reporting knowing that the IRS will probably challenge. I would feel a
little better if someone has already tried and successful. Denny from
Michigan says that is how he filed his return and is being audited by the
IRS. Hopefully, he will give a report on how his return is finalized.
Thanks
J. T. Spornhauer
_____
From: vpFREE@yahoogroups.com [mailto:vpF…@…com] On Behalf Of
Jean Scott
Sent: Wednesday, February 10, 2010 12:01 PM
To: AA vpFREE Group
Subject: Re: [vpFREE] 1099's
Although there are a couple of other tax books available that give good
general information, I know of no other that gives as much specific
information for the machine player as "Tax Help for Gamblers." That's why
I wrote this book since I found other books very lacking, often seeming to
be written by people who had never gambled themselves. That's why I brought
Marissa Chien in with me for this book. She is a professional tax preparer
who has had a lot of experience with cases involving gamblers plus she is a
gambler herself, both in video poker and live poker.
Topics like 1099's, sessions, comps, professional status - there is no one
answer to how to handle these on your returns. We don't give short
flat-out answers - we discuss the range of possibilities, the pros and cons
of doing it any one way - and then you can decide how to do it according to
your particular circumstances if you do your own returns. And even if you
use a professional preparer, this book can help you become knowledgeable
enough to give that person all the necessary information for them to make a
better decision. And in many cases, especially if the preparer is not a
gambler himself and/or has not had any/much experience in this specific tax
arena, the taxpayer has given the book to him to help him begin his own
education here.
It is good to share personal tax experiences on this or other Internet
forums but some of the "short advice" given may not be applicable to your
circumstances and some may actually be downright wrong. There are so many
ways to interpret the very unclear IRS writings on this subject that we have
to be careful how we use "advice" we get from non-professionals. Even tax
professionals don't always agree so it is not wise to be too "dogmatic."
You can learn more about the book at my Web site below. Also you can order
it as an e-Book at http://www.shoplva.
<http://www.shoplva.com/collections/ebooks/> com/collections/ebooks/ for
$9.98.
This is the newly-updated 2010 edition.
________________
Jean $¢ott, Frugal Gambler
http://queenofcomps.com/> .com/
You can read my blog at
http://jscott.lvablog.com/> lvablog.com/
[Non-text portions of this message have been removed]
Jan: I assume your case with the $4K win on machine B also gave you back a $900. ticket. If that the case then I would agree with what you said. Please note though, I would also mention prominently on an attachment that this session included a W2G for $4,000. Remember IRS's computer tracks W2G's. Since the W2G is not listed on the main form it can kick you out for an audit in which case you tell them to see the attachment which the computer doesn't look at. If you played one day the entire year they probably will tell you you should have listed the $4,000 as winnings and deducted the $2,900 as a schecdule A deduction. Depending on other income for the year, this can hurt you because of the reduced value of your deductions or the Alternative minimum tax or both. I will put in my disclaimer that this is just my opinion as I am not an EA or CPA nor do I intend to be either.
There is later post by Jean Scott on this site. Whlie several other books exist, the Gambling tax book by Ms. Scott and Marissa Chien is the best and most current book addressing your question. Not only do I have a copy, but I gave another copy to my CPA accountant. I stongly urge you to read this book. DEnny
--- In vpFREE@yahoogroups.com, "Jan Spornhauer" <janspornhauer@...> wrote:
Denny, thanks for the information. I am trying to use 6:00 a. m. to 6:00 a.
m. as time period. To make sure that I understand, I perceive that you
report session income as follows: You play V/P let's say for 8 hours
beginning at 9:00 a. m. on two machines. Machine A - Cash in $ 2000 - TITO
= 0 Loss $ 2,000. Machine B Cash in $ 1,000 - TITO = $ !00 , $ 4,000 W2G
Hand Pay. Session win = $ 1,100 (4,000 - 2,000 - 900). If this was your only
gambling for year, you would report $ 1,100 as other income on 1040. There
would be no gambling losses reported. You may use different terminology but
is the session win calculation correct and the way you report your gambling
income.Thanks
Jan
_____
From: vpFREE@yahoogroups.com [mailto:vpF…@…com] On Behalf Of
denflo60
Sent: Tuesday, February 09, 2010 9:42 PM
To: vpFREE@yahoogroups.com
Subject: [vpFREE] Re: 1099'sJan: Since I started filing as a recreational gambler some years ago I used
the session method and was never audited. I reported based on the session
length of a day because of the "churn" of the machines. To me the bigger
question is the precise definition of a session.
When I started betting significant money and filed as a professional with
schedule C, I continued using the session method. Given that the Casino
supplies the total of my accrued W2G's, I have used the daily session method
because it agrees with the W2G submission. I do have complete contemporary
records of all $1200.+ wins from the attachments of the Casino W2's which
can be tied back through time of day of the "hit" to my records. I survived
the 2006 audit about using Scedule C but what never directly asked about
session method or length. As I have reported here and you responded I have
faced the same issues for the 2007 year and I, my accountant and my lawyer
will fill out paper work to to request the matter be taken to tax court.
Whether the session method or session length comes up at that time I do not
know, we are prepared to defend it and its length. Of course whether I win
or lose will be not known for some lengthy period. Denny--- In vpFREE@yahoogroups. <mailto:vpFREE%40yahoogroups.com> com, "Jan
Spornhauer" <janspornhauer@> wrote:
>
> I would like to know of anyone has tried to use daily session win VS using
> the W2G as income. It seems to me this is a more fair way to report
gambling
> income but maybe the IRS doesn't look at it that way. Unfortunately, a
> taxpayer who has any substantial W2G receipts and has equal losses is in
the
> end paying more income tax.
>
>
>
> The Gambler
>
> _____
>
> From: vpFREE@yahoogroups. <mailto:vpFREE%40yahoogroups.com> com
[mailto:vpFREE@yahoogroups. <mailto:vpFREE%40yahoogroups.com> com] On Behalf
Of
> tsaimitch
> Sent: Tuesday, February 09, 2010 1:51 PM
> To: vpFREE@yahoogroups. <mailto:vpFREE%40yahoogroups.com> com
> Subject: [vpFREE] Re: 1099's
>
>
>
>
>
> You can deduct losses on Schedule A, or file as a professional gambler
with
> Schedule C.
> Might be able to use "Session wins" rather than 1099s as you wins, but I
> hear conflicting info on this board.
>
> See http://groups.
<http://groups.yahoo.com/group/vpFREE/message/104962>
yahoo.com/group/vpFREE/message/104962>
> yahoo.com/group/vpFREE/message/104962 for some problems with Schedule C.
>
> http://www.readybet
<http://www.readybetgo.com/book-reviews/review-606.html>
go.com/book-reviews/review-606.html>
> go.com/book-reviews/review-606.html
>
> How To Turn Poker Playing Into a Business (Knowing What to Deduct to
Improve
> Your Odds With the IRS) by Ann-Margaret Johnston (122 pages, paperbound,
> $19.95) and The Tax Guide for Gamblers by Roger and Yolanda Roche -- Sixth
> Edition (64 pages, paperbound, $29.95). Both are excellent references and
> both are available at Gambler's Book Shop in Las Vegas.
>
> http://www.casinoga
<http://www.casinogaming.com/features/taxlaws.html>
ming.com/features/taxlaws.html>
> ming.com/features/taxlaws.html
>
> All winnings from all forms of gambling are taxable and must be declared
as
> income on your tax return.
>
> All losses from all forms of gambling are deductible as an itemized
> deduction for recreational players, limited to the amount of winnings
> declared.
>
> Professional gamblers hold file as a self-employed business using Schedule
> C.
>
> The value of "comps" received are considered to be gaming winnings and
> should be included in your total winnings. This does allow you to deduct
> gaming losses to offset the income from the "comps."
>
> Wins and losses are reported only in the year they occur. Excess losses
> cannot be carried forward or back to offset winnings in other years.
>
> Married couples filing a joint return must combine their winnings and
> combine their losses, and report only one figure for each.
>
> The IRS has issued instructions that "lumping" is unacceptable. "Lumping"
is
> the practice of reporting one net win figure and no losses, or reporting
> nothing if your net from gambling is a loss. You must report the total of
> your winning sessions separately from the total of your losing sessions.
>
> The IRS requires that an accurate diary or similar record must be
maintained
> for substantiating your wins and losses, and that the diary should contain
> at least the following information: (1) the date and type of your specific
> wager; (2) the name of the gaming establishment; (3) the address or
location
> of the gaming establishment; (4) the names of the other person(s), if any,
> present with you; (5) the amount(s) you won or lost.
>
> The IRS also requires that in order to substantiate your diary,
supplemental
> records are required, including the following (these records are not to be
> submitted with your return, but will be needed should you be audited): (1)
> W-2Gs; (2) wagering tickets or receipts; (3) canceled checks; (4) credit
> card records such as cash advances; (5) bank withdrawals; (6) any receipts
> provided by the gambling establishment.
>
> KEEP RECORDS OF YOUR GAMBLING TRANSACTIONS
>
> In February of 1998, in a case involving an unemployed gambler who failed
to
> file timely returns for two years and kept no records, the Tax Court ruled
> that the gambler could not deduct unsubstantiated gambling losses. In
> addition the Tax Court upheld the IRS which had levied additional amounts
> for failure to file on time and for the accuracy-related negligence
penalty.
> This increased the gambler's tax liability by 43%!
>
> In other words, they threw the book at this gambler, who actually told the
> court that although he maintained a gambling log for one of the years in
> question, it was not accurate because it was too time-consuming to make it
> precise.
>
> If you are collecting W2-Gs and not keeping accurate records, this very
well
> could be in your future.
>
> <many more details on the webpage>
>
> http://www.irs. <http://www.irs.gov/taxtopics/tc419.html>
gov/taxtopics/tc419.html>
> gov/taxtopics/tc419.html
>
> You may deduct gambling losses only if you itemize deductions. Claim your
> gambling losses as a miscellaneous deduction that is not subject to the 2%
> limit on Form 1040, Schedule A (PDF). However, the amount of losses you
> deduct may not be more than the amount of gambling income reported on your
> return. It is important to keep an accurate diary or similar record of
your
> gambling winnings and losses. To deduct your losses, you must be able to
> provide receipts, tickets, statements or other records that show the
amount
> of both your winnings and losses. Refer to Publication 529, Miscellaneous
> Deductions, for more information.
>
>
>
>
>
> [Non-text portions of this message have been removed]
>[Non-text portions of this message have been removed]
All the stuff in my post came from the weblinks in the post.
Comps are taxable came from http://www.casinogaming.com/features/taxlaws.html
I haven't filed any significant casino losses, so this casino website could be wrong.
However, this fits my knowledge of "comps" in other non-gambling arenas. For example, "free gym memberships" from an employer are taxable, so the $120/month cool gym membership, still ends up costing $30-60/month in taxes. Bummer.
If gamblers have been IRS-approved for not reporting "comps", awesome! I receive as much in "comps" as I do in "winnings". I've only had three taxables while gambling (2 tournaments & 1 slot payout), so I'm a newbie in this area (and may need help from others on this board if my winnings/losses become significant in the future).
Just depends on what passes actual IRS audits. Tax law is so complicated. In 30 years of filing personal & business tax returns, I don't think any of my tax returns is 100% correct. Most of the time the differences wash out in the long-run so I'm lazy and don't file amended returns.
--- In vpFREE@yahoogroups.com, "Don the Dentist" <dds6@...> wrote:
I don't think this is correct. My understanding is that comps are not taxable. Where did you get this information from?
Don the Dentist
--- In vpFREE@yahoogroups.com, "tsaimitch" <tsai@> wrote:
>> The value of "comps" received are considered to be gaming winnings and should be included in your total winnings. This does allow you to deduct gaming losses to offset the income from the "comps."
If you're using Sch. C, there's no difference in Federal tax between using
the session method or any other method as long as you get the same net win
for the year. So I guess I'm confused about why that would matter.
Cogno
-----Original Message-----
From: vpFREE@yahoogroups.com [mailto:vpF…@…com] On Behalf
Of denflo60
Sent: Tuesday, February 9, 2010 6:42 PM
To: vpFREE@yahoogroups.com
Subject: [vpFREE] Re: 1099'sJan: Since I started filing as a recreational gambler some years ago I
used the session method and was never audited. I reported based on the
session length of a day because of the "churn" of the machines. To me
the bigger question is the precise definition of a session.
When I started betting significant money and filed as a professional
with schedule C, I continued using the session method. Given that the
Casino supplies the total of my accrued W2G's, I have used the daily
session method because it agrees with the W2G submission. I do have
complete contemporary records of all $1200.+ wins from the attachments
of the Casino W2's which can be tied back through time of day of the
"hit" to my records. I survived the 2006 audit about using Scedule C
but what never directly asked about session method or length. As I
have reported here and you responded I have faced the same issues for
the 2007 year and I, my accountant and my lawyer will fill out paper
work to to request the matter be taken to tax court. Whether the
session method or session length comes up at that time I do not know,
we are prepared to defend it and its length. Of course whether I win
or lose will be not known for some lengthy period. Denny— In vpFREE@yahoogroups.com, "Jan Spornhauer" <janspornhauer@…>
wrote:
>
> I would like to know of anyone has tried to use daily session win VS
using
> the W2G as income. It seems to me this is a more fair way to report
gambling
> income but maybe the IRS doesn't look at it that way. Unfortunately,
a
> taxpayer who has any substantial W2G receipts and has equal losses is
in the
> end paying more income tax.
>
>
>
> The Gambler
>
> _____
>
> From: vpFREE@yahoogroups.com [mailto:vpF…@…com] On
Behalf Of
> tsaimitch
> Sent: Tuesday, February 09, 2010 1:51 PM
> To: vpFREE@yahoogroups.com
> Subject: [vpFREE] Re: 1099's
>
>
>
>
>
> You can deduct losses on Schedule A, or file as a professional
gambler with
> Schedule C.
> Might be able to use "Session wins" rather than 1099s as you wins,
but I
> hear conflicting info on this board.
>
> See http://groups.
<http://groups.yahoo.com/group/vpFREE/message/104962>
> yahoo.com/group/vpFREE/message/104962 for some problems with Schedule
C.
>
> http://www.readybetgo.com/book-reviews/review-
606.html>
> go.com/book-reviews/review-606.html
>
> How To Turn Poker Playing Into a Business (Knowing What to Deduct to
Improve
> Your Odds With the IRS) by Ann-Margaret Johnston (122 pages,
paperbound,
> $19.95) and The Tax Guide for Gamblers by Roger and Yolanda Roche –
Sixth
> Edition (64 pages, paperbound, $29.95). Both are excellent references
and
> both are available at Gambler's Book Shop in Las Vegas.
>
> http://www.casinoga
<http://www.casinogaming.com/features/taxlaws.html>
> ming.com/features/taxlaws.html
>
> All winnings from all forms of gambling are taxable and must be
declared as
> income on your tax return.
>
> All losses from all forms of gambling are deductible as an itemized
> deduction for recreational players, limited to the amount of winnings
> declared.
>
> Professional gamblers hold file as a self-employed business using
Schedule
> C.
>
> The value of "comps" received are considered to be gaming winnings
and
> should be included in your total winnings. This does allow you to
deduct
> gaming losses to offset the income from the "comps."
>
> Wins and losses are reported only in the year they occur. Excess
losses
> cannot be carried forward or back to offset winnings in other years.
>
> Married couples filing a joint return must combine their winnings and
> combine their losses, and report only one figure for each.
>
> The IRS has issued instructions that "lumping" is unacceptable.
"Lumping" is
> the practice of reporting one net win figure and no losses, or
reporting
> nothing if your net from gambling is a loss. You must report the
total of
> your winning sessions separately from the total of your losing
sessions.
>
> The IRS requires that an accurate diary or similar record must be
maintained
> for substantiating your wins and losses, and that the diary should
contain
> at least the following information: (1) the date and type of your
specific
> wager; (2) the name of the gaming establishment; (3) the address or
location
> of the gaming establishment; (4) the names of the other person(s), if
any,
> present with you; (5) the amount(s) you won or lost.
>
> The IRS also requires that in order to substantiate your diary,
supplemental
> records are required, including the following (these records are not
to be
> submitted with your return, but will be needed should you be
audited): (1)
> W-2Gs; (2) wagering tickets or receipts; (3) canceled checks; (4)
credit
> card records such as cash advances; (5) bank withdrawals; (6) any
receipts
> provided by the gambling establishment.
>
> KEEP RECORDS OF YOUR GAMBLING TRANSACTIONS
>
> In February of 1998, in a case involving an unemployed gambler who
failed to
> file timely returns for two years and kept no records, the Tax Court
ruled
> that the gambler could not deduct unsubstantiated gambling losses. In
> addition the Tax Court upheld the IRS which had levied additional
amounts
> for failure to file on time and for the accuracy-related negligence
penalty.
> This increased the gambler's tax liability by 43%!
>
> In other words, they threw the book at this gambler, who actually
told the
> court that although he maintained a gambling log for one of the years
in
> question, it was not accurate because it was too time-consuming to
make it
> precise.
>
> If you are collecting W2-Gs and not keeping accurate records, this
very well
> could be in your future.
>
> <many more details on the webpage>
>
> http://www.irs.gov/taxtopics/tc419.html>
> gov/taxtopics/tc419.html
>
> You may deduct gambling losses only if you itemize deductions. Claim
your
> gambling losses as a miscellaneous deduction that is not subject to
the 2%
> limit on Form 1040, Schedule A (PDF). However, the amount of losses
you
> deduct may not be more than the amount of gambling income reported on
your
> return. It is important to keep an accurate diary or similar record
of your
> gambling winnings and losses. To deduct your losses, you must be able
to
> provide receipts, tickets, statements or other records that show the
amount
> of both your winnings and losses. Refer to Publication 529,
Miscellaneous
> Deductions, for more information.
>
>
>
>
>
> [Non-text portions of this message have been removed]
>------------------------------------
vpFREE Links: http://members.cox.net/vpfree/Links.htm
Yahoo! Groups Links
<<If you're using Sch. C, there's no difference in Federal tax between using
the session method or any other method as long as you get the same net win
for the year. So I guess I'm confused about why that would matter.>>
You are making the assumption that the IRS is logical!!!! 
We are being audited for 2007 because our session win on our business return was smaller than our W-2G total.
________________
Jean $�ott, Frugal Gambler
http://queenofcomps.com/
You can read my blog at
http://jscott.lvablog.com/
<<I already have your book and recognize that IRS is very vague on what is
acceptable. I do think that I am going to try to use the session method of
reporting knowing that the IRS will probably challenge. I would feel a
little better if someone has already tried and successful.>>
We (and lots of others) HAVE used the session method successfully for many years, but we (and others) have been audited once in awhile and questioned about this. Usually the IRS has accepted explanations but sometimes it has taken a lot of time to go through the explaining process. So that is why many people just go with the W-2G figure and adjust the loss figure to get the same "real" figure.
________________
Jean $�ott, Frugal Gambler
http://queenofcomps.com/
You can read my blog at
http://jscott.lvablog.com/
<<I already have your book and recognize that IRS is very vague on what is
acceptable. I do think that I am going to try to use the session method of
reporting knowing that the IRS will probably challenge. I would feel a
little better if someone has already tried and successful.>>We (and lots of others) HAVE used the session method successfully for many
years, but we (and others) have been audited once in awhile and questioned
about this. Usually the IRS has accepted explanations but sometimes it has
taken a lot of time to go through the explaining process. So that is why
many people just go with the W-2G figure and adjust the loss figure to get
the same "real" figure.
Declaring less income than the total of W-2Gs is a major red flag.
We are being audited for 2007 because our session win on our business
return
was smaller than our W-2G total.
I guess you mean your gross income was less than the W-2G total. But you
could add an appropriate number to income and expenses without changing the
tax owed, right?
Cogno
Thanks very much! Thats what I needed to know.
J. T. Spornhauer
_____
From: vpFREE@yahoogroups.com [mailto:vpF…@…com] On Behalf Of
Jean Scott
Sent: Wednesday, February 10, 2010 3:18 PM
To: vpFREE@yahoogroups.com
Subject: Re: [vpFREE] 1099's
<<I already have your book and recognize that IRS is very vague on what is
acceptable. I do think that I am going to try to use the session method of
reporting knowing that the IRS will probably challenge. I would feel a
little better if someone has already tried and successful.>>
We (and lots of others) HAVE used the session method successfully for many
years, but we (and others) have been audited once in awhile and questioned
about this. Usually the IRS has accepted explanations but sometimes it has
taken a lot of time to go through the explaining process. So that is why
many people just go with the W-2G figure and adjust the loss figure to get
the same "real" figure.
________________
Jean $¢ott, Frugal Gambler
http://queenofcomps.com/> .com/
You can read my blog at
http://jscott.lvablog.com/> lvablog.com/
[Non-text portions of this message have been removed]
<<I guess you mean your gross income was less than the W-2G total. But you
could add an appropriate number to income and expenses without changing the
tax owed, right?
Right! That what I mean by "adjusting."
________________
Jean $�ott, Frugal Gambler
http://queenofcomps.com/
You can read my blog at
http://jscott.lvablog.com/