IRS news for the Casual Gambler

[Robert1]

<http://groups.yahoo.com/group/vpFREE/message/96180;_ylc=X3oDMTJyMTRiZ28yBF9
TAzk3MzU5NzE1BGdycElkAzQ2NDEwMTcEZ3Jwc3BJZAMxNzA1MDY1NzMyBG1zZ0lkAzk2MTgwBHN
lYwNkbXNnBHNsawN2bXNnBHN0aW1lAzEyMzMwNTkxOTU-> Re: IRS news for the Casual
Gambler

Posted by: "b.glazer@att.net"
<mailto:b.gla…@…net?Subject=%20Re%3A%20IRS%20news%20for%20the%20Casual%
20Gambler> b.glazer@att.net <http://profiles.yahoo.com/glazerbarry>
glazerbarry

Tue Jan 27, 2009 4:21 am (PST)

1f. Re: IRS news for the Casual Gambler
Date: Mon Jan 26, 2009 5:59 am ((PST))

I have a thought on complying with IRS rules while reducing paperwork for
the "casual gambler".

The memo from the IRS states that converting slot machine gaming tokens into
cash ("REDEEM") is the time to calculate a win/loss event. Given that most
casinos no longer use slot machine gaming tokens, slot machine printed
tickets are a reasonable substitute. Therefore, you could insert cash into
the first slot machine that you are going to play on your first gaming trip
of the year and record that amount and print a ticket when you are done with
that machine. Then you can insert that ticket in the next machine you are
going to play (either on the same trip or on your next trip to that casino,
as long as it doesn't expire). You would insert additional cash into a
machine when needed (and record that event). Repeating this process
throughout a year you would create only one reportable win/loss event per
casino for the year when you redeem the last ticket on the last visit of the
year. The win/loss would be the amount you cashed out on the last ticket
plus any hand pays you received during the year minus the total amount of
cash inserted into machines during the year. If during the year the amount
on the ticket became too large then you could cash it out creating two
reportable win/loss events for the year, etc.

The downside risks are misplacing a ticket, having to fund your play with
cash until you cash out the ticket, not returning to that casino before year
end and not cashing a ticket by expiration date.

Any thoughts on this approach?

Bob B.

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

[David]

--- In vpFREE@yahoogroups.com, "Robert Berger" <bob.berger1@...>
wrote:

I have a thought on complying with IRS rules while reducing

paperwork for

the "casual gambler".

The memo from the IRS states that converting slot machine gaming

tokens into

cash ("REDEEM") is the time to calculate a win/loss event. Given

that most

casinos no longer use slot machine gaming tokens, slot machine

printed

tickets are a reasonable substitute. Therefore, you could insert

cash into

the first slot machine that you are going to play on your first

gaming trip

of the year and record that amount and print a ticket when you are

done with

that machine. Then you can insert that ticket in the next machine

you are

going to play (either on the same trip or on your next trip to that

casino,

as long as it doesn't expire). You would insert additional cash

into a

machine when needed (and record that event). Repeating this process
throughout a year you would create only one reportable win/loss

event per

casino for the year when you redeem the last ticket on the last

visit of the

year. The win/loss would be the amount you cashed out on the last

ticket

plus any hand pays you received during the year minus the total

amount of

cash inserted into machines during the year. If during the year

the amount

on the ticket became too large then you could cash it out creating

two

reportable win/loss events for the year, etc.

The downside risks are misplacing a ticket, having to fund your

play with

cash until you cash out the ticket, not returning to that casino

before year

end and not cashing a ticket by expiration date.

Any thoughts on this approach?

Interesting approach, but it rates not to work. The Memorandum is not
to be cited as precedent, but even if it were, there is a major
problem. The Memo specifies all sort of facts such as the tokens not
being cashed till play ceased, also the taxpayer is a cash basis
taxpayer. However these facts could not be the basis in law for the
Memo's conclusion. There is a doctrine called constructive receipt
that all IRS personnel are familiar with. If, for example you (a cash
basis taxpayer) receive payment in December, but put the check in
your draw and cash it in January you are held to have received
payment in the year ending in Dec. As the taxpayer could cash the
tokens at any time the tokens would be held to be a cash equivalent
and there would be no legal difference between receiving cash, tokens
or tickets.

One potentially helpful point in the Memo (undoubtedly useable only
at the initial audit level) is the Memo's citing of the taxpayer's
accounting method - cash basis. Since the chief counsel's office
stated this fact, arguendo it may be important. Generally (unless
otherwise specified) a taxpayer must account for income according to
generally accepted accounting principals consistently applied. As the
concept of "session" is somewhat nebulous, a taxpayer whose records
reflect income or loss on the basis of a trip being a "session" and
has done so consistently over a number of years, can make the
argument that his accounting method for gambling income is consistent
with gaap consistently applied. Being able to make such an argument
is not controlling, and I would advise the better and safer approach
is to rely on the Scott/Chen definitions of "Session".

David