1j. Re: 1099's
Date: Wed Feb 10, 2010 1:35 pm ((PST))> 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?
At the federal level, adding "an appropriate number" (and the same number, of course) to income and expenses/losses will result in the same tax (not always true for state, see my other recent post). I won't go into the irony of this being fraudulent (remember where you sign, it says something like you promise the stuff in the return is correct -- but you've knowingly falsified the correct figures!).
While a session win that is less than the W2G is perhaps a red flag to the IRS, the fact is, roughly half the time you'd expect the rest of your session to be a loss, and the session win SHOULD be less than the W2G in those sessions. I don't know if the IRS just doesn't understand that, or just figures they'll audit you anyway and hope you'll pay up. Surely they can understand that sometimes you sit down and lose money EXCEPT for the "jackpot"??!!
Someone's got to fund the deficit, might as well be honest taxpayers.
--BG
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