The IRS released what is called a Chief Counsel Memorandum regarding
the calculation of gambling win. As we all have discussed ad nauseum,
there never has been clarity with regard to what constitutes a gambling
win. Is it per day, per machine, per play etc? This memorandum helps
clarify that for slot machines, specifically for the casual gambler
and, from what I read, significantly simplifies the record keeping.
The memorandum is located on the IRS website at the following location
http://www.irs.gov/pub/irs-utl/am2008011.pdf. It was released on Dec
12, 2008. While the memorandum talks about tokens, the essence of the
discussion is what money is taken into the casino by a patron and how
much does the patron leave with. If there is a surplus, it is a gain;
if there is a deficit, it is a loss. Good news!
IRS news for the Casual Gambler
Thanks for the link. This indeed simplifies record keeping significantly.
NOTE: you must remove the last period in the URL linked to get to the
right page. should be linked as
http://www.irs.gov/pub/irs-utl/am2008011.pdf
···
--- In vpFREE@yahoogroups.com, "sarahmukasa10" <sarahmukasa10@...> wrote:
The IRS released what is called a Chief Counsel Memorandum regarding
the calculation of gambling win. As we all have discussed ad nauseum,
there never has been clarity with regard to what constitutes a gambling
win. Is it per day, per machine, per play etc? This memorandum helps
clarify that for slot machines, specifically for the casual gambler
and, from what I read, significantly simplifies the record keeping.
The memorandum is located on the IRS website at the following location
http://www.irs.gov/pub/irs-utl/am2008011.pdf. It was released on Dec
12, 2008. While the memorandum talks about tokens, the essence of the
discussion is what money is taken into the casino by a patron and how
much does the patron leave with. If there is a surplus, it is a gain;
if there is a deficit, it is a loss. Good news!
Thanks for the link. One thing makes me wonder though. The
following excerpt:
2 We note that § 6041 requires gambling businesses to report payments
over certain dollar amounts,
"gross receipts" reporting. The amount reported as gross receipts
from many types of gambling is not
reduced by the amount (basis) of the wager. See Rev. Proc. 77-29,
1977-2 C.B. 538. However, such
reported payments are not necessarily taxable wagering gains. A
gambling business may issue an
information return for a casual gambler's winning spin, but the
gambler continues play and wagers and
loses that amount during slot machine play. Wagering gain or loss is
determined at the time the casual
gambler redeems his or her tokens at the end of slot machine play.
certainly seems to say that even if you get a w2-g, your win/loss for
that session is calculated as where you stand when you stop playing.
For anyone playing higher denominations, that would mean that your
totaled wins will likely be less than your w2-g totals. I have a
hard time believing that the irs will not have a problem with that.
I am guessing that anyone who is playing large enough that their
totaled session wins is smaller than their w2-g totals will not be
considered a "Casual Gambler." So I would probably recommend that
you still always make sure that your gambling wins for the year are
at least as large as your w2-g totals for the year.
The big problem with this"Memorandum" is this statement early on:
"This advice may not be used or cited as precedent.
···
________________
Jean $�ott, Frugal Gambler
http://queenofcomps.com/
You can read my blog at
http://lasvegasadvisor.com/blogs/jscott/
Thats great!!!
···
On Sun, Jan 25, 2009 at 6:49 PM, sarahmukasa10 <sarahmukasa10@yahoo.com>wrote:
The IRS released what is called a Chief Counsel Memorandum regarding
the calculation of gambling win. As we all have discussed ad nauseum,
there never has been clarity with regard to what constitutes a gambling
win. Is it per day, per machine, per play etc? This memorandum helps
clarify that for slot machines, specifically for the casual gambler
and, from what I read, significantly simplifies the record keeping.
The memorandum is located on the IRS website at the following location
http://www.irs.gov/pub/irs-utl/am2008011.pdf. It was released on Dec
12, 2008. While the memorandum talks about tokens, the essence of the
discussion is what money is taken into the casino by a patron and how
much does the patron leave with. If there is a surplus, it is a gain;
if there is a deficit, it is a loss. Good news!
[Non-text portions of this message have been removed]
If a person plays $1 single line and gets a RF for $4000, say 5 times
in a year, but they have many days that they loose say $500 - $1000,
you are suggesting that they report a $20,000 profit for the year?
This is crazy. The person is most likely a looser for the year.
There is no reason to report a profit.
A couple of years ago, my wife and I were playing $2 Super Double
Bonus and all quad J,Q,Ks pay $1200. We hit 14 w2gs in a single day
and lost about $4k at the end of the day. We did not report a win.
···
--- In vpFREE@yahoogroups.com, "pokegimp" <wincerwj@...> wrote:
I have a
hard time believing that the irs will not have a problem with that.
I am guessing that anyone who is playing large enough that their
totaled session wins is smaller than their w2-g totals will not be
considered a "Casual Gambler." So I would probably recommend that
you still always make sure that your gambling wins for the year are
at least as large as your w2-g totals for the year.
Sorry, my original post was obviously unclear. What I was saying was
that if your totaled wins (gross wins) were not at least the amount of
your w2-gs (which is what would happen for many using the methodology
in the link), I think the irs would become very interested, very
quickly. If, however, you inflate your gross wins to be at least the
amount of your w2-gs you are more likely to avoid automatic scrutiny.
I mistakenly assumed that people would realize that you would have to
increase your total losses (deducted losses) by the same amount to
maintain an accurate net win/loss.
···
--- In vpFREE@yahoogroups.com, "jimnkelli" <jbecker11@...> wrote:
If a person plays $1 single line and gets a RF for $4000, say 5 times
in a year, but they have many days that they loose say $500 - $1000,
you are suggesting that they report a $20,000 profit for the year?
I ran this by Marissa and here was her quick take:
"It can't be cited but it can still be used when dealing with the IRS at the administrative levels. Basically the IRS has legitimized our session method,
"I can't see how this "simplifies" recordkeeping. You still have to keep track of your sessions. IRS just seems to agree with what we've been telling people. A session is what you win or lose in the casino in a given day. Not trip not month not weekend etc.."
···
________________
Jean $�ott, Frugal Gambler
http://queenofcomps.com/
You can read my blog at
http://lasvegasadvisor.com/blogs/jscott/
Sorry, my original post was obviously unclear. What I was saying
was that if your totaled wins (gross wins) were not at least the
amount of your w2-gs (which is what would happen for many using
the methodology in the link), I think the irs would become very
interested, very quickly.
They do. In fact, I am currently being audited over this very issue
for 2006.
If, however, you inflate your gross wins to be at least the
amount of your w2-gs you are more likely to avoid automatic
scrutiny. I mistakenly assumed that people would realize that
you would have to increase your total losses (deducted losses)
by the same amount to maintain an accurate net win/loss.
That brings its own set of problems. Inflating your gross wins
also inflates your AGI. Inflating your AGI beyond a certain point
affects what deductions you can take and to what extent, etc.
In 2006 I had a net loss from gambling activities. If I sum my
winning sessions separately, let's say they added up to $W. However
the total of my W2Gs for 2006 was nearly three times $W.
Method 1: report $W in winnings on 1040, deduct $W in losses on
schedule A.
Method 2: report 3x$W in winnings on 1040, deduct 3x$W in losses on
schedule A.
Method 2 would have resulted in over $2000 in increased federal and
state tax liability. I chose method 1. You may well ask whether I
still feel I chose correctly, now that I'm being audited. Well, (a)
I might still prevail, and (b) I'm going to have the same issue on
an even larger scale for my 2007 return, so it's probably worth
going through the exercise anyway.
···
--- In vpFREE@yahoogroups.com, "pokegimp" <wincerwj@...> wrote:
--- In vpFREE@yahoogroups.com, b.glazer@... wrote:
I don't have any idea how states treat professional gamblers, but
for those who don't qualify, and who play at any significant
level, and who report honestly, it is (in my opinion) virtually
impossible to play a long-term positive game after taxes, unless
you live in a state that does NOT tax gross gambling wins.
You may not even need the "unless" clause... not being able to net
or carry over losses from year to year (a la capital gains/losses)
really sucks.
...
IRS just seems to agree with what we've been
telling people. A session is what you win or lose in the casino in
a given day. Not trip not month not weekend etc.."
The facts in the IRS Memo are too restrictive to draw this conclusion.
It is cited that the player buys in for $100 and never cashes until
done that day. If the player cashed tokens and re-bought that day
would this constitute multiple sessions? On the other hand if the
player bought in at 11:00 P.M. and cashed or busted the ensuing A.M.,
would midnight constituted a break between 2 sessions even if play
continuous?
Besides the lack of precedential value of this memorandum, the only
strong insight into the IRS position that can be inferred is that
a "session" rather than individual bets should be used to determine
winnings. Perhaps the lack of one certain restrictions in the cited
facts, such as all play being on one machine, could be helpful, if an
agent were ever to say a session begins and ends with play on an
individual machine.
David
···
--- In vpFREE@yahoogroups.com, "Jean Scott" <queenofcomps@...> wrote:
My understanding is the deduction phase out is being phased out.
···
--- In vpFREE@yahoogroups.com, "midnight1626" <midnight1626@...> wrote:
That brings its own set of problems. Inflating your gross wins
also inflates your AGI. Inflating your AGI beyond a certain point
affects what deductions you can take and to what extent, etc.
I have noticed that the W2Gs state which machine you won on (the machine
#). I never knew if that was for record keeping purposes for the casino or
what. Now, I'm wondering if it is because the IRS wants you to only offset
your winnings on THAT specific machine.
Also, in Keno don't they tell you that you can deduct the cost of the ticket
from your wins? They don't say "you can deduct all of your other losses on
this trip or this year against your wins."
Granted, all of this should be left up to someone who understands tax issue
a lot better than I do (and I'm not talking about the IRS!!). 
···
On Mon, Jan 26, 2009 at 11:55 AM, d_richheimer <d_richheimer@yahoo.com>wrote:
Perhaps the lack of one certain restrictions in the cited
facts, such as all play being on one machine, could be helpful, if an
agent were ever to say a session begins and ends with play on an
individual machine.David
[Non-text portions of this message have been removed]
Does anyone know at what AGI threshold you start to get screwed on your
taxes for a married couple filing jointly?
Also, I'm aware that there is a "standard deduction" you can take, but in
order to offset your winnings with losses, you have to itemize. But, isn't
there still a standard amount that you deduct for yourself and your spouse
when itemizing?
I have just over $24K of W2G's for last year, but ended up with a net loss
for the year. 
···
From: vetsen <vetsen@cox.net>
Reply-To: <vpFREE@yahoogroups.com>
Date: Mon, 26 Jan 2009 22:32:47 -0000
To: <vpFREE@yahoogroups.com>
Subject: [vpFREE] Re: IRS news for the Casual Gambler
My understanding is the deduction phase out is being phased out.
--- In vpFREE@yahoogroups.com <mailto:vpFREE%40yahoogroups.com> ,
"midnight1626" <midnight1626@...> wrote:
That brings its own set of problems. Inflating your gross wins
also inflates your AGI. Inflating your AGI beyond a certain point
affects what deductions you can take and to what extent, etc.
For 2008, the adjusted gross income threshold for the personal
exemption phase-out is $239,950 for marrieds filing jointly, $199,950
for heads of household, $159,950 for singles, and $119,975 for
marrieds filing separately. The itemized deduction phase-out begins
with adjusted gross incomes of $79,975 for marrieds filing separately
and $159,950 for all other taxpayers.
Does anyone know at what AGI threshold you start to get screwed on
your
taxes for a married couple filing jointly?
Also, I'm aware that there is a "standard deduction" you can take,
but in
order to offset your winnings with losses, you have to itemize.
But, isn't
there still a standard amount that you deduct for yourself and your
spouse
<<I have noticed that the W2Gs state which machine you won on (the machine
#). I never knew if that was for record keeping purposes for the casino or
what. Now, I'm wondering if it is because the IRS wants you to only offset
your winnings on THAT specific machine.>>
No, you can offset gambling losses against ANY gambling wins - i.e., you could offset VP losses against lottery wins.
···
________________
Jean $�ott, Frugal Gambler
http://queenofcomps.com/
You can read my blog at
http://lasvegasadvisor.com/blogs/jscott/