2.2. Re: IRS news for the Casual Gambler
Date: Tue Jan 27, 2009 11:46 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?
In addition to the points made by another person who responded, and without referring back to the memo, which sets no precedent and establishes no rules anyway, I think I remember seeing something in there about "leaving the casino" - which I think the IRS would readily interpret as "I'm done with that session" even if you argued that you just went out for a cigarette and were coming right back to continue playing. Of course, the only way they could argue with you is if there was evidence that you left, which would probably not be the case for a cigarette, but could certainly be easily proved if you left town, at the other extreme. And I'm not sure how it all works in the end, but I think YOU have the burden of proving your case, they simply say you owe the tax and let you try to convince them you don't.
Of course, the need to comply with their reporting requirements is only to assure that you paid the proper tax. If there's no question that you paid all the tax you were supposed to, they probably aren't going to fuss over your record-keeping or whether you complied with any definitions of "session" - but if they think you had a net win greater than you reported, for whatever reasons (and they have a lot of latitude, I think, in making such decisions) then your deficient record-keeping could possibly be used to discount your own documentation that you'd like (need!) to defend yourself with.
PS - I'm not a tax accountant or lawyer, so my advice has the authenticity and value commensurate with the price you paid for it.
If you want some advice that "holds water", show the letter to a tax accountant or a lawyer, hopefully one with some expertise in gambling and taxes, and see if they think your idea is a good one.
Or just give it a try and the IRS might provide you with a free response 
--BG
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