vpFREE2 Forums

Editing new tax book

#1

"Tax Help for Gamblers" will be going back to the printers soon. I would appreciate any input about changes/updates that need to be made. And I always appreciate input about typos, spelling and grammatical errors, etc. in any of my writing, including in my blog.

···

________________
Jean $¢ott
The much-expanded new edition of my tax book,
including a new chapter on poker, is now available
to order at my Web site, http://queenofcomps.com/.

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

#2

"Tax Help for Gamblers" will be going back to the printers soon. I

would appreciate any input about changes/updates that need to be
made. And I always appreciate input about typos, spelling and
grammatical errors, etc. in any of my writing, including in my blog.

________________
Jean $¢ott

I don't have the book, but one thing that should definitely be in it,
or its future editions, is an explanation of the "alternative minimum
tax deathtrap"; being forced to itemize in order to offset gambling
wins (and thereby losing your standard deduction); and how to file
Schedule C to avoid those two pitfalls.

···

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

#3

> "Tax Help for Gamblers" will be going back to the printers soon. I
would appreciate any input about changes/updates that need to be
made. And I always appreciate input about typos, spelling and
grammatical errors, etc. in any of my writing, including in my blog.

tralfamidorgooglycrackers wrote:

I don't have the book, but one thing that should definitely be in it,
or its future editions, is an explanation of the "alternative minimum
tax deathtrap"; being forced to itemize in order to offset gambling
wins (and thereby losing your standard deduction); and how to file
Schedule C to avoid those two pitfalls.

The existing text has a strong discussion of this topic.

FWIW, Sched C filing is likely a weak alternative by which to avoid
the penalty in long form filing to report gambling activity that's
inherent for those who otherwise would file short form (most often,
non-home owners and those in states w/o income tax).

Also, for the active player with high reported w-2G income, a more
likely problem than AMT complication is the deduction phase out that
occurs as a consequence of the artificial AGI inflation involved.

These, and other related tax concerns, are addressed and the existing
edition is a worthwhile investment for someone such as yourself who
obviously has these issues on their mind.

- Harry

···

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

#4

Fortunately, this is going away.

Beginning in 2006, the overall limit on certain itemized deductions
was gradually eliminated. Under this phaseout rule, the limit on
itemized deductions was reduced by one-third in 2006 and will be
reduced by one-third in 2007 so that the 3% phaseout is reduced to 2%.
In 2008 and 2009, the 3% phaseout will be reduced to 1%. The reduction
will be eliminated in 2010.

···

--- In vpFREE@yahoogroups.com, "Harry Porter" <harry.porter@...> wrote:

Also, for the active player with high reported w-2G income, a more
likely problem than AMT complication is the deduction phase out that
occurs as a consequence of the artificial AGI inflation involved.

- Harry

#5

<<
I don't have the book, but one thing that should definitely be in it,
or its future editions, is an explanation of the "alternative minimum
tax deathtrap"; being forced to itemize in order to offset gambling
wins (and thereby losing your standard deduction); and how to file
Schedule C to avoid those two pitfalls.>>

All that is already covered in the book. Filing as a professional gambler is not an easy thing - we discuss at length this option.

···

________________
Jean $�ott
The much-expanded new edition of my tax book,
including a new chapter on poker, is now available
to order at my Web site, http://queenofcomps.com/.

#6

FWIW, Sched C filing is likely a weak alternative by which to avoid
the penalty in long form filing to report gambling activity that's
inherent for those who otherwise would file short form (most often,
non-home owners and those in states w/o income tax).

Well, from my experience, it hasn't been a "weak" alternative at
all. As you obliquely point out, for someone already filing long
form, it's not much trouble at all to tack on a Schedule C. Keep in
mind that we're talking about itemizing SIGNIFICANT gambling
wins/losses here; if you gamble enough so that this becomes an
issue, or if you had a big score this year, you are in all
likelihood in long form territory anyway.

The big plus is that if you report your gambling activity as income-
generating, then you can avoid the choppiness that comes from big
wins and losses: you report NET gambling income. Furthermore, you
can deduct related expenses: this is not trivial. A third benefit is
that there is some ability (being reduced all the time, but still..)
to carry losses forward, which a 1040 filer cannot do at all.

I've filed 1040 long+Sched C for about fourteen years now, and never
a peep from the tax monster--even with .75 million in W2-G's in one
year.

#7

<<A third benefit is
that there is some ability (being reduced all the time, but still..)
to carry losses forward, which a 1040 filer cannot do at all.>>

I think that this is not correct. Schedule C filers normally may carry forward their losses. But IRC 165 (d) takes precedence in how you treat gambling losses.

···

________________
Jean $�ott
The much-expanded new edition of my tax book,
including a new chapter on poker, is now available
to order at my Web site, http://queenofcomps.com/.

#8

Harry Porter wrote:

> FWIW, Sched C filing is likely a weak alternative by which to avoid
> the penalty in long form filing to report gambling activity that's
> inherent for those who otherwise would file short form (most often,
> non-home owners and those in states w/o income tax).

tralfamidorgooglycrackers wrote:

Well, from my experience, it hasn't been a "weak" alternative at
all. As you obliquely point out, for someone already filing long
form, it's not much trouble at all to tack on a Schedule C. Keep in
mind that we're talking about itemizing SIGNIFICANT gambling
wins/losses here; if you gamble enough so that this becomes an
issue, or if you had a big score this year, you are in all
likelihood in long form territory anyway.

The big plus is that if you report your gambling activity as income-
generating, then you can avoid the choppiness that comes from big
wins and losses: you report NET gambling income. Furthermore, you
can deduct related expenses: this is not trivial. A third benefit is
that there is some ability (being reduced all the time, but still..)
to carry losses forward, which a 1040 filer cannot do at all.

I've filed 1040 long+Sched C for about fourteen years now, and never
a peep from the tax monster--even with .75 million in W2-G's in one
year.

For an individual such as yourself, for whom it would appear that vp
play may indeed be your predominant income-related activity and where
you may be able to readily substantiate that it's not merely a
recreational activity, Sched C could be a viable option.

For most who might pick up Jean's book, vp is a recreation, even if
high denom play means they rack up substantial W2-G's. Jean and
Marissa advise re the considerations involved in qualifying as a
professional gambler for tax filing purposes and discuss the factors
to be weighed.

I wrote the quote you cite above ("likely a weak alternative")
immediately after quoting text from your original post -- where you
indicate that a primary motivation for filing Sched C would be to
avoid the potential loss of one's standard deduction were you to
otherwise file a short form in absence of the gaming activity. When
the cited benefit is limited to that alone, I'll still hold that Sched
C is an option that has limited appeal, in most cases. (However, that
is not descriptive of your personal circumstances.)

For those who have an interest in the prospects of filing as a
professional gambler, Jean's/Marissa's book provides good insight. An
internet search will surface other good info. An interesting article
on the topic is:
http://www.nysscpa.org/cpajournal/2007/907/essentials/p46.htm

- Harry

#9

<<A third benefit is
that there is some ability (being reduced all the time, but

still..)

to carry losses forward, which a 1040 filer cannot do at all.>>

I think that this is not correct. Schedule C filers normally may

carry

forward their losses. But IRC 165 (d) takes precedence in how

you treat

gambling losses.

IRC 165 (d) only applies to offsetting GAMBLING losses: let's take
the following example:

Joe Gambler has a net gaming win of $28,000 for the year. BUT---his
expenses associated with that income are $23,000 (travel, lodging,
all the normal expenses you associate with a business). So, if he
files a Schedule C, his taxable income from gambling is $5000; it's
$28,000 if he files Form 1040 alone.

As in any other business, Joe has to pay self-employment tax on net
income. This is 15.3 percent. The advantage of the C filing,
however, offsets that, in that just about all reasonable expenses
are now deductible from gambling net income--including the vehicle
expense to get to the casino, cost of tax and other record keeping,
meals while on the job, even that cushion you bought to sit on while
at the machine.

www.professionalgamblerstatus.com has some interesting insights on
creating a separate entity (S corporation, for example) that all
your gambling activity can be filtered through.

So, a loss generated from simply getting creamed at the machines is
can NOT be carried forward--but a net loss reported on Schedule C
that is caused by expenses more than offsetting net income IS.

What's interesting (if that's the word) is that none of this is
really nailed down, even in the eyes of the IRS. There's a
surprising amount of subjectivity in the interpretation of the laws.
What's worked for me--following the advice of several professionals--
is diligent record-keeping, and an aggressive stance as far as my
filing status and right to deduct legitimate expenses. The IRS bear
bluff-charges a lot; if you don't back down, quite often, they back
off.

···

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