vpFREE2 Forums

IRS news for the Casual Gambler

#1

11c. Re: IRS news for the Casual Gambler
Date: Sun Jan 25, 2009 10:37 pm ((PST))

....

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.

I would certainly never report a larger win than I actually experienced just because of the above opinion. And it is very easy to have losses for a session exceeding what is awarded in W2Gs, esp. at machines of $10 denomination and higher where more common occurrences such as quads or better will generate a W2G, and we all know that just getting a set of quads does not guarantee one walks away a winner.

The fact that I have a lot of W2Gs does not change my outcome, and I don't know why anyone would want to report more wins, either per session, or for the year, than they actually had.

"Casual gambler" is, I would guess, a term used to distinguish the taxpayer from one who has qualified and is filing as a "Professional Gambler" - and I would not think the distinction is deteremined based on level of play.

The bad news, if there is any, is that each "session" seems to be defined in terms of a single stretch at a single machine. For example, four hours divided up into eight machines could show four $200 wins and four $200 losses. For federal taxes, this can show a gross win that is much larger than actual, although it is completely offset by the losses - $800 win, $800 loss. When you file your state taxes, if you're in a state that taxes GROSS gambling wins and doesn't allow the losses to be deducted against them, this turns a "zero sum" four hour session into an $800 taxable win - when you walked with nothing new in your pocket. And most of the states that tax gross win do so as reported on the federal return, which now requires a reporting method that inflates gross win, if you change machines or take breaks.

Many players used to use a single day or even a single trip as a "session" in their reporting; that may have always been incorrect, but now it definitely is not the way to do it.

--BG

···

====================

#2

I wrote the post below before I read the link - in fact, it seems to say that a "session" is from when you enter until when you cash out -- so that if you use several machines, take breaks, perhaps even if you take your TITO stub and come back the next day and re-use it (or save them all until you leave town, if you're a traveler), that the "cash-out" event determines the end of the "session", or at least "leaving the casino" (and if you're staying in their hotel, that also could be extended for the entire trip, I suppose) -- that, in opposition to what I just wrote, can be a big "plus" for the gambler when reporting at the state level.

It could, in fact, validate the net-win/loss-per-trip method of reporting which would indeed be far simpler record-keeping as well -- how much money did you come to town with and how much did you leave with.

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.

--BG

···

============

I would certainly never report a larger win than I actually experienced just because of the above opinion. And it is very easy to have losses for a session
exceeding what is awarded in W2Gs, esp. at machines of $10 denomination and
higher where more common occurrences such as quads or better will generate a
W2G, and we all know that just getting a set of quads does not guarantee one
walks away a winner.

The fact that I have a lot of W2Gs does not change my outcome, and I don't know
why anyone would want to report more wins, either per session, or for the year,
than they actually had.

"Casual gambler" is, I would guess, a term used to distinguish the taxpayer from
one who has qualified and is filing as a "Professional Gambler" - and I would
not think the distinction is deteremined based on level of play.

The bad news, if there is any, is that each "session" seems to be defined in
terms of a single stretch at a single machine. For example, four hours divided
up into eight machines could show four $200 wins and four $200 losses. For
federal taxes, this can show a gross win that is much larger than actual,
although it is completely offset by the losses - $800 win, $800 loss. When you
file your state taxes, if you're in a state that taxes GROSS gambling wins and
doesn't allow the losses to be deducted against them, this turns a "zero sum"
four hour session into an $800 taxable win - when you walked with nothing new in
your pocket. And most of the states that tax gross win do so as reported on the
federal return, which now requires a reporting method that inflates gross win,
if you change machines or take breaks.

Many players used to use a single day or even a single trip as a "session" in
their reporting; that may have always been incorrect, but now it definitely is
not the way to do it.

--BG

====================

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

#3

b.glazer wrote:

The bad news, if there is any, is that each "session" seems to be
defined in terms of a single stretch at a single machine.

I don't think that's necessarily the case.

The focus of the memorandum would seem to treat gaming from a cash
perspective. The period from purchase of gaming tokens to redemption
is treated as a single "gambling transaction" (which, in this context,
might be a stronger term than "session", which is ill-defined for tax
purposes).

It could be maintained that a ticket is a paper equivalent to gaming
tokens. If so, within the scope of this memorandum it could be
reasoned that the "transaction" doesn't conclude until such time as
credits purchases with cash are exhausted or until a ticket is redeemed.

Under that interpretation, there would be room to change machines
within a gambling transaction. Further, it would afford the
opportunity to reduce the magnitude of reported winning sessions (vs.
a reporting in which each machine's play is treated distinctly).

As Jean reminds us, the memorandum isn't binding on any examiner or
tax court. At best it serves as authoritative backup to your
treatment of gaming results that's stronger than a third-party
interpretation of IRS tax guidance. To that extent, it may be of some
value, if you report in a manner consistent with it.

http://www.irs.gov/pub/irs-utl/am2008011.pdf

- Harry

#4

b.glazer wrote:

I wrote the post below before I read the link - in fact, it seems
to say that a "session" is from when you enter until when you cash
out -- so that if you use several machines, take breaks, perhaps
even if you take your TITO stub and come back the next day and
re-use it (or save them all until you leave town, if you're a
traveler), that the "cash-out" event determines the end of the
"session", or at least "leaving the casino" (and if you're staying
in their hotel, that also could be extended for the entire trip, I
suppose) -- that, in opposition to what I just wrote, can be a big
"plus" for the gambler when reporting at the state level.

It could, in fact, validate the net-win/loss-per-trip method of
reporting which would indeed be far simpler record-keeping as well
-- how much money did you come to town with and how much did you
leave with.

And I drafted/posted before I had the chance to reach this post (I
tend to multitask ... which in this case means I broke to prepare
bagel/coffee for Bev and I :wink:

You and I are on the same wavelength. One exception would be the
practicality of a full-day/multi-day cash transaction period. Any
cash insertion would reasonably break the transaction (even if done
prior to exhaustion of credits), voiding the idea of a "full trip"
reporting period.

The only feasible means by which to extend the transaction for a full
trip, short of the "everlasting gobstopper" winning trip, would be an
initial ticket purchase sufficient to cover your maximum loss
position. Such a scenario is likely to draw scrutiny as attempting to
evade the substance of the tax code.

Still, so long as each ticket is played to exhaustion, there's would
be no need to record interim wins under this interpretation ... with
the exception of cash handpays (and where a casino is willing to pay a
handpay via a ticket ... I've heard of this, principally in the case
of HL room play ... that might be deferred).

- Harry

#5

The fact that I have a lot of W2Gs does not change my outcome, and I

don't know why anyone would want to report more wins, either per
session, or for the year, than they actually had.

I might be in the minority here, but I personally DO want to report
more wins if that means reducing my chances of an audit. If I have a
session (and let's assume for simplicity that this is the only gambling
I do throughout the year) where I get $10K in w2-gs but only walk away
with a $500 profit, I am inclined to count this as a $10K win and a
$9500 loss instead of just counting it as a $500 win. Even if it is
correct to just count this as a $500 win, odds are you are going to be
called in to explain why your gambling winnings don't appear to include
all of the $10K that they have on w2-gs. If I lived in a state that
taxed gross gambling winnings, I would be more inclined to do this
differently, but thankfully that is not the case.

···

--- In vpFREE@yahoogroups.com, b.glazer@... wrote:

#6

Harry: I knew this would spark a good discussion, particularly the
way in which different people look at the same text and have a
different perspective. I focused upon the sentence on page four as
follows: "We think that the fluctuating wins and losses left in play
are not accessions to wealth until the taxpayer redeems her tokens
and can definitively calculate the3 amount above or below basis...".
The key to me is the phrase accessions to wealth. To my mind that is
when I leave the casino - it is one day or leave town if I am on a
vacation. In my case, if I bring $2000 to gamble with to Vegas and I
come home with $2500, I have a $500 net win which at that point in
time is real money and added to my wealth.

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

b.glazer wrote:
> I wrote the post below before I read the link - in fact, it seems
> to say that a "session" is from when you enter until when you

cash

> out -- so that if you use several machines, take breaks, perhaps
> even if you take your TITO stub and come back the next day and
> re-use it (or save them all until you leave town, if you're a
> traveler), that the "cash-out" event determines the end of the
> "session", or at least "leaving the casino" (and if you're

staying

> in their hotel, that also could be extended for the entire trip,

I

> suppose) -- that, in opposition to what I just wrote, can be a

big

> "plus" for the gambler when reporting at the state level.
>
> It could, in fact, validate the net-win/loss-per-trip method of
> reporting which would indeed be far simpler record-keeping as

well

> -- how much money did you come to town with and how much did you
> leave with.

And I drafted/posted before I had the chance to reach this post (I
tend to multitask ... which in this case means I broke to prepare
bagel/coffee for Bev and I :wink:

You and I are on the same wavelength. One exception would be the
practicality of a full-day/multi-day cash transaction period. Any
cash insertion would reasonably break the transaction (even if done
prior to exhaustion of credits), voiding the idea of a "full trip"
reporting period.

The only feasible means by which to extend the transaction for a

full

trip, short of the "everlasting gobstopper" winning trip, would be

an

initial ticket purchase sufficient to cover your maximum loss
position. Such a scenario is likely to draw scrutiny as attempting

to

evade the substance of the tax code.

Still, so long as each ticket is played to exhaustion, there's would
be no need to record interim wins under this interpretation ... with
the exception of cash handpays (and where a casino is willing to

pay a

···

handpay via a ticket ... I've heard of this, principally in the case
of HL room play ... that might be deferred).

- Harry

#7

sarahmukasa10 wrote:

Harry: I knew this would spark a good discussion, particularly the
way in which different people look at the same text and have a
different perspective. I focused upon the sentence on page four as
follows: "We think that the fluctuating wins and losses left in
play are not accessions to wealth until the taxpayer redeems her
tokens and can definitively calculate the3 amount above or below
basis...".
The key to me is the phrase accessions to wealth. To my mind that
is when I leave the casino - it is one day or leave town if I am on
a vacation. In my case, if I bring $2000 to gamble with to Vegas
and I come home with $2500, I have a $500 net win which at that
point in time is real money and added to my wealth.

There's is a pointed distinction in the memorandum between cash and
tokens. It's evident that it's only because tokens haven't been
converted to cash that a "gambling transaction" isn't yet concluded.

Any extension of that reasoning to other forms of gaming can only be
done by analogy. There's room to argue that so long as you continue
to play on purchased credits, you can transfer play to another machine
via voucher and still be engaged in the gaming transaction that was
initiated with the earlier cash buy-in to credits.

But it can be inferred that once cash comes into play again, either as
a ticket redemption or additional credit buy in, that a new gaming
transaction has begun and the prior one must be closed our for
recording keeping.

- H.

#8

I dont know about any of this but my session lasts 12 months. It is either ahead or behind at the end of the year!! S

···

--- On Mon, 1/26/09, pokegimp <wincerwj@yahoo.com> wrote:

From: pokegimp <wincerwj@yahoo.com>
Subject: [vpFREE] Re: IRS news for the Casual Gambler
To: vpFREE@yahoogroups.com
Date: Monday, January 26, 2009, 8:59 AM

--- In vpFREE@yahoogroups. com, b.glazer@... wrote:

The fact that I have a lot of W2Gs does not change my outcome, and I

don't know why anyone would want to report more wins, either per
session, or for the year, than they actually had.

I might be in the minority here, but I personally DO want to report
more wins if that means reducing my chances of an audit. If I have a
session (and let's assume for simplicity that this is the only gambling
I do throughout the year) where I get $10K in w2-gs but only walk away
with a $500 profit, I am inclined to count this as a $10K win and a
$9500 loss instead of just counting it as a $500 win. Even if it is
correct to just count this as a $500 win, odds are you are going to be
called in to explain why your gambling winnings don't appear to include
all of the $10K that they have on w2-gs. If I lived in a state that
taxed gross gambling winnings, I would be more inclined to do this
differently, but thankfully that is not the case.

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