Let me begin by stating I am not a tax profession but have done plenty of
research including reviewing tax laws, IRS regulations, speaking to many CPA's,
many other gamblers, and yes I have read the Tax Guide from Scott/Chein. I
replied to a message regarding this book last year (see message 53046). In
addition to this my W2G's exceed $500,000 a year and have done so for the past
10 years so I post from personal experience. With that said let me
summarize...
As far as the IRS is concerned wins = W2Gs (this is all they see and this is
all they know) This number is in their computers and better match to your
#'s unless some letter is attached making the review done by hand.
If you want make it simple when you file:
Simple Method
Gambling wins you report must be >= W2G's reported to them
Losses can equal up to those wins
Pro's:
Easy
Con's:
Deductions are fazed out and this translates into a tax liability of approx.
$1000 per $100,000 of W2G's (so even if you lost that year you lose again)
Hard Method:
Keep a diary and use the session method
Pro's:
Don't faze out your deductions as quickly
Cons:
Ridiculous record keeping needed (like a professional gambler without the
advantages)
Likely to be audited unless you live in Las Vegas
If audited you will lose sleep, lose time and spend about $10,000 "fighting"
the IRS and after all this still may lose
As far as I see the decision is really very simple.
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