vpFREE2 Forums

CET Win Loss Statement now available

#1

Harry, you make the exact case that I did in my original post: you can only
claim a loss of actual cash played/put into the machine. Taking out more
than you put in, however that happens, is a win in the amount of the
difference. However, in saying the IRS would probably not have a problem
with his process, you overlook the part where Jim suggests that he might
get a W2G, play part of the hand pay back, and report what is left as a
win. It has always been my understanding that claiming less than the total
of all W2G wins as your gambling win on you income tax is begging to be
audited, and clearly not a method the IRS accepts. I realize that Jim was
posing a hypothetical which he doesn't think would happen to him because of
his choice of games. I am certain that you and I do not want to ever
suggest a process that would get another person on this board into tax hot
water, so I thought clarification was in order.
Joel P.

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

#2

That's an important clarification, Joel. Thanks!

This gets into the stickiness of "session reporting". misscraps has shared extensively the problems she encountered when, in employing session reporting, her return showed a smaller value for "gross winnings" than was reported in w-2g's. In her case, the IRS wouldn't buy onto it and required an amended return.

Without delving into this in detail, a netting of session losses against w-2g reported wins and reporting a reduced amount is a red flag for the IRS and perhaps best avoided. (On the other hand, if other session wins during the year are sufficient to offset the w-2g session losses, so that return reported gross winnings equals or exceeds the w-2g total, then not only is this reporting not likely to be problematic, but I see such reporting as being more consistent with general IRS guidance.)

---In vpFREE@yahoogroups.com, <joejavinn@...> wrote :

Harry, you make the exact case that I did in my original post: you can only
claim a loss of actual cash played/put into the machine. Taking out more
than you put in, however that happens, is a win in the amount of the
difference. However, in saying the IRS would probably not have a problem
with his process, you overlook the part where Jim suggests that he might
get a W2G, play part of the hand pay back, and report what is left as a
win. It has always been my understanding that claiming less than the total
of all W2G wins as your gambling win on you income tax is begging to be
audited, and clearly not a method the IRS accepts. I realize that Jim was
posing a hypothetical which he doesn't think would happen to him because of
his choice of games. I am certain that you and I do not want to ever
suggest a process that would get another person on this board into tax hot
water, so I thought clarification was in order.
Joel P.

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

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

#3

I discuss the “session reporting” issue at length in the new edition of Tax Help for Gamblers (which will be available as an eBook by the end of January). I cite court cases that support the “session” method but warn about the problems and dangers of using a win figure less than your W-2G total. Personally we use our W-2G total and then “make up” a loss figure that gives the same actual win total that our diary shows. If we ever get audited, I figure – hope? - we can show our detailed diary and justify our actual win total. However, some people can’t do this because of 1040 Line 21 problems: a state income tax that doesn’t allow gambling losses, they can’t file as a professional gambler so a high AGI causes umpteen penalty issues, yadda dadda.

The problem with a tax discussion here on this forum, especially about how to count free play, is people are giving OPINIONS. This can be misleading and dangerous. The IRS has never addressed the subject of free play. So however you treat this it becomes a personal matter. In the book we talk about several ways people handle this on their returns, but we never say how you SHOULD do it – we can’t because the IRS has NOT addressed it and there have been no court cases about it. No matter how much education and financial experience you have, remember that when you talk about tax issues, so much depends on PERSONAL facts and circumstances. And just because one explanation of an issue seems “logical” – remember the government, and especially the IRS, has never been accused of being logical!!!!

···

------------------------------------------
Jean $¢ott, Frugal Gambler
http://queenofcomps.com/
You can read my blog at
http://jscott.lvablog.com/

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

#4

Jean wrote:

The IRS has never addressed the subject of free play. So however you treat this it becomes a personal matter. In the book we talk about several ways people handle this on their returns

I can't imagine how it should be treated other than an addition to
taxable income, just as any win without a w-2g is. Do you think it
might not be taxable?

#5

About free play: <<I can't imagine how it should be treated other than an addition to
taxable income, just as any win without a w-2g is. Do you think it might not be taxable?

Some people count it as a “comp,” just like free buffets, bolstering their argument that some casinos give you a choice of free play or comps for your points. Some think it might depend on whether you file as a recreational player or a professional. Some mostly play it until it is gone (like pigging out at the buffet ), not just through once, and would only report it if they hit a W-2G jackpot. Not only does the IRS not address this, there is no agreement among tax preparers. I’m not saying this isn’t a suitable subject for this forum, but everyone should remember that comments on this tax issue are opinions, not facts of law. Even if you have had an experience with an IRS person about free play, that doesn’t mean you can say “this is how it should be done.” IRS people differ in interpretations when there is not a clear rule. And taxpayers have varying individual circumstances.

···

------------------------------------------
Jean $¢ott, Frugal Gambler
http://queenofcomps.com/
You can read my blog at
http://jscott.lvablog.com/

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

#6

Speaking of gross winnings, does anyone know whether it is too late to
submit Form 5754 (to divide winnings) after a W2-G has been issued by a
casino; or can they cancel the W2-G and reissue W2-Gs to those named on the
form?

···

On Tue, Jan 6, 2015 at 8:54 AM, harry.porter@verizon.net [vpFREE] < vpFREE@yahoogroups.com> wrote:

That's an important clarification, Joel. Thanks!

This gets into the stickiness of "session reporting". misscraps has shared
extensively the problems she encountered when, in employing session
reporting, her return showed a smaller value for "gross winnings" than was
reported in w-2g's. In her case, the IRS wouldn't buy onto it and required
an amended return.

Without delving into this in detail, a netting of session losses against
w-2g reported wins and reporting a reduced amount is a red flag for the IRS
and perhaps best avoided. (On the other hand, if other session wins during
the year are sufficient to offset the w-2g session losses, so that return
reported gross winnings equals or exceeds the w-2g total, then not only is
this reporting not likely to be problematic, but I see such reporting as
being more consistent with general IRS guidance.)

---In vpFREE@yahoogroups.com, <joejavinn@...> wrote :

Harry, you make the exact case that I did in my original post: you can
only
claim a loss of actual cash played/put into the machine. Taking out more
than you put in, however that happens, is a win in the amount of the
difference. However, in saying the IRS would probably not have a problem
with his process, you overlook the part where Jim suggests that he might
get a W2G, play part of the hand pay back, and report what is left as a
win. It has always been my understanding that claiming less than the total
of all W2G wins as your gambling win on you income tax is begging to be
audited, and clearly not a method the IRS accepts. I realize that Jim was
posing a hypothetical which he doesn't think would happen to him because
of
his choice of games. I am certain that you and I do not want to ever
suggest a process that would get another person on this board into tax hot
water, so I thought clarification was in order.
Joel P.

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

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

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

#7

Richard Gordon wrote:

Speaking of gross winnings, does anyone know whether it is too late to
submit Form 5754 (to divide winnings) after a W2-G has been issued by a
casino; or can they cancel the W2-G and reissue W2-Gs to those named on the
form?

The instructions on the form say for the person who hit the jackpot to
take it back to the casino and have them reissue w-2gs. I've always
assumed this meant after the original w-2g was issued, which matches
my limited experience. I've almost never done it this way, either.
Going back to the casino may be the technically correct way to do it,
but, for practical purposes, it's a waste of time. I've almost always
used them as the person whose income the jackpot is supposed to be
filling it out and giving it to the person who hit it, who then shows
it to the IRS if s/he's asked why it's not included in taxable income.
I have extensive experience with that and have never had a problem,
with the occasional exception of a shockingly huge tax bill being sent
to the one who hit the jackpot and didn't include it in his/her
income, which has always been an easy matter to clear up.