The IRS wants you to keep a contemporary gaming diary. This should include
time of day, amounts gambled, won, lost, W2Gs, machine number if possible,
plus witnesses if any, name of casino, and so on.
The casino win/loss statements are good supplementary evidence for the
diaries. Personally I have found some of these statements very innaccurate.
Apparently the IRS generally doesn't just accept win/loss statements (though many
players only get them) because they realize that cards can be left out,
pulled out, put in by other people, left sitting in machines, etc., making for
innaccuracies.
If your total of "wins" is less than your W2G totals, expect possible
questions. According to Jean Scott's tax booklet and others, you may be able to
use "session" wins instead of W2Gs, but if so you may be questioned and should
plan to include a note with your tax return or be prepared to answer
questions.
The whole gambling area is a total gray area. It is unknown whether items
such as cashback, free play, bounceback, bonus or other cash is to be
considered as part of your "win" total or if it is closer to "comps" which are not
taxable. Personally I feel these should be treated as part of your wins, since
they can quickly add up to thousands of dollars under modern gambling
conditions.
Gambling requlations are totally outdated, since they have W2Gs set at a low
$1200 which probably would be equivalent to $10,000 in today's dollars.
They also require you to offset "wins" with losses only when you do a itemized
deduction. This is a problem for anyone who wouldn't normally do an itemized
deduction. The IRS regulations do not state anything about winning versus
losing "sessions" - they don't define sessions or anything else. Jean Scott's
(and other) advice look at the fact that the IRS requires people to keep
"reasonable" records. Obviously it is unreasonable to expect gamblers to record
every single pull of a handle or total up total wins as every cent that comes
out, and total losses as every single losing pull.
Regulations were written at a time when most of the gambling wins that were
considered were things like horse racing wagers. No one envisioned the
spread of gambling across the country where millions of "average Americans" would
be wagering thousands of dollars during a year. No one envisioned a time
when a $100 bill would be worth about what $10 or less used to be worth or where
an average type person could accumulate numerous W2Gs, yet basically be
netting close to no real "win".
ยทยทยท
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For a review of a booklet on gambling & taxes check my website
_http://members.aol.com/GamblingE_ (http://members.aol.com/GamblingE)
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