"Kevin" <letterman@poboxes.com> wrote ...........
···
** Subject: Re: $1200 W2G
**
** --- In vpFREE@yahoogroups.com, Jean-Baptiste Queru <jbqueru@g...>
** wrote:
** > Is that a way of saying that if I put $10 in a JoB machine (dollar,
** > 5-coin), hit 2P (win $5) and then hit nothing (lose $5), finally
** > walking away with $10, I would owe taxes on my $5 winnings?
**
** Actually, you would owe taxes on your $10 winnings, but could write
** off $10 in losses for a net tax amount owed of $0.00.
At the federal level, if you itemize, you can deduct losses up to winnings on a session basis. The most stringent definition of a session is a single hand. The best for a player is the entire year, if we keep it to a one year period.
Let's say I am a local player and I define my session as one day. I play 3 days a week so I have 156 sessions in a tax year. I run $5,000 a day through the video poker machines and break even for the year. By taking 1 day as the measuring period, I may have $75,000 in wins and $75,000 in losses. If I make $40,000 a year at my day job, it sure seems like an activity that triples my annual income would raise suspicion and trigger an audit. Then you have to rely your own records to back up that $75,000 in losses. If you read the IRS requirement for a gambling diary, they are very detailed. I don't of anyone ( including some pretty big players) that keep that detailed of records.
For all of the rumblings about people cheating the IRS out of gambling winnings, I'd wager that the IRS over collects on gambling winnings. Think of all the W2s that are hit by people who don't itemize. Gambling money is not treated entirely like regular income and it's not treated entirely like a hobby. I'm not sure the IRS planned it as a windfall when the rules were made but it sure turned out that way.
John Zaroff
Delphi Electronics and Safety
313-996-3682 (w)
313-378-2987 ( Cell)
3133782987@vtext.com ( text page)
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