4. re Good news for the casual gambler (from IRS)
Date: Thu Jan 29, 2009 12:09 am ((PST))I would have loved that IRS memorandum, except for the part that Jean Scott
also noticed: "This advice may not be used or cited as precedent."As some of you may remember, a couple of years ago I used the "sessions"
method of reporting our gambling income (which is exactly what this memo is
referring to). I was audited, because my "wagering gains" were less than my
W2G
totals. For example, on a day where I had hit a $4000 royal and gotten a
$4000 W2G, I also lost $2000 - so I reported a "wagering gain" or "gambling
income" of $2000.After 6 months of haggling with the IRS wherein they ignored any replies I
sent them (and apparently lost at least 1 letter/return), and contacting a
Taxpayer Advocate, we gave up, and just did it the IRS way of listing a total
for W2Gs as "gambling income" rather than our actual "wagering gain" (or session
gains). The IRS didn't question our losses (they seem to realize that most
gamblers lose more than they win, as unfortunately seems to be the case with
us for almost every year!! argh!).This resulted in a much higher tax bill than if we had used sessions, but at
least I didn't get an ulcer!We've been reporting it that way ever since.
This year we once again have a whoppingly large number of W2Gs, and a big
actual gambling loss for the year. Since the W2Gs increase our Adjusted Gross
Income, this ends up causing us to pay more in taxes, even though our actual
gross "income" from gambling is a loss.I would love to go back to the sessions method - but it just doesn't look
like this Memorandum is of enough use if it cannot be cited as a precedent.? I just don't know but I do know that my dealings with the IRS last time
were really upsetting.
Seems like you might be "ripe" for another try. Everyone has to make the personal judgment call as to whether it's worth the threat / risk / hassle of an audit to file in a manner favorable to the taxpayer, or that's it's not worth it, and just pay the extra taxes. Personally, if it doesn't involve out-of-pocket costs for me (eg, an accountant or lawyer) beyond any interest / penalty that might be assessed, I'd gladly try to keep my taxes down.
You, of course, have the unfortunate sitation of a personal "precedent" and might have a tougher time getting it changed for current and future tax returns if re-audited.
But you might get a whole new set of personnel -- and I'd suggest trying to appeal as high as you can without cost (beyond your time). If they don't respond to correspondence (or lose it), try sending it certified - this MIGHT give you recourse, since THEY are, I'm sure, required by procedure or code to respond in a timely manner, which is probably defined (I'm just guessing here, they might well be "above the law" in that regard).
--BG
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