For those filing a tax return, as a professional gambler, what does the IRS
expect to be reported as gambling winnings aside from the actual monies won
gambling. For example, does one report cash back, bounce back checks received in
the mail, comped rooms, comped meals, etc?
[Non-text portions of this message have been removed]
For those filing a tax return, as a professional gambler, what does
the IRS expect to be reported as gambling winnings aside from the
actual monies won gambling. For example, does one report cash back,
bounce back checks received in the mail, comped rooms, comped meals,
etc?
----------------------------------
Not sure of the regs for filing as a professional gambler...but for
those of us who report "gaming" wins and losses as part of their 1040
tax returns, my understanding is that comped rooms and meals are not
counted as "winnings" and therefore are not included the adjusted
gross income. Losses against the winnings are included in the
itemized deductions.
Bounce backs and cash back is a gray area...some filers include them
and some don't...for example, the Coast properties allowed you to get
$10.00 in cash back or $12.00 in comps for every 4,000 points...does
it make sense (I know we're talking IRS here, so using the
word "sense" may be an oxymoron) that one is included in the taxable
base and the other is not?
As always, consult with a tax authority...
Don the Dentist
NOTE: The following is NOT to be construed as professional advice. I am
NOT a professional. Ultimately, each of us, alone, are responsible for the
management of our particular tax/financial situations.
Having made my disclaimer :), here's my take:
If you are filing a tax return as a professional gambler, your taxpayer
status would by definition, be "self-employed". Thus, your rooms, meals,
transportation, etc. would be considered business expenses. Since these
items are not an expense to you as they are "comp'd" by a casino, they may
be considered a "neutral" transaction (neither income nor expense). In
other words, filing as "self-employed", these items might be declared as
"income", but would then be deducted as "business expenses" (if they weren't
"comp'd" to begin with), thus the term, "neutral transaction".
As for cash back and/or bounce back cash:
Everything I've read on the subject says: any and all money obtained
through gambling activity is considered "income" by the IRS and needs to be
declared as such - whether or not that money is accounted for or tracked by
either you or a casino (in the form of a W2-G or 1099, for example). I'm
sure different people treat it differently (depending on your audit risk
tolerance and/or personal integrity comfort level - in the end, YOU are
responsible for the accounting), but the nature of the transaction, itself,
indicates "gain" (vs. a "neutral" transaction). As I'm sure you know, this
money, once identified as a "gain", may eventually be listed as a "loss" if
it is used as part of a bankroll that results in a losing session.
Again, I am NOT a professional or expert in this area; you are best served
by consulting such a person to obtain expert advice for your particular
situation.
Perhaps some of the posters to this group who declare themselves as full or
part time professional gamblers would like to chime in - Rob Singer, maybe?
Good playing and good luck to all.
Rawhidetoo
on 9/23/03 2:23 PM, spotmoney@aol.com at spotmoney@aol.com wrote:
For those filing a tax return, as a professional gambler, what does the IRS
expect to be reported as gambling winnings aside from the actual monies won
gambling. For example, does one report cash back, bounce back checks received
in
the mail, comped rooms, comped meals, etc?[Non-text portions of this message have been removed]
vpFREE Links: http://www.west-point.org/users/usma1955/20228/VP/Links.htm
Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/
.....For example, does one report cash back, bounce back checks
received in the mail, comped rooms, comped meals, etc?
Disclaimer: Like the person in an earlier reply, I'm not an
accountant either.
Based on everything I've read and heard on this subject, there is no
definitive answer to these questions. Perhaps it's best left that
way. If the IRS ever comes up with a strict rule regarding tax
treatment of comps - it probably won't be the answer that we are
looking for.
I have read some advice written by actual tax accountants that says
to declare all of these things as income. Personally, that seems way
too conservative to me. Casinos hand out thousands and thousands of
free meals and rooms every year. I strongly doubt if very many
people are showing these comps as income - whether they file as a
professional gambler or not. These types of comps are essentially a
discount that the casino gives you on your bill in appreciation of
your patronage. True - it's often a 100% discount, but I don't see
where that makes a big difference. Think about this: If you use a
coupon that you clip out of a newspaper that takes $20 off your bill
at a Holiday Inn, would you declare that $20 discount as income?
Probably not. Is this really that much different than when a casino
gives you a very cheap or even free room or free meal?
With cash back, things get a bit trickier. On one hand, we could use
a similar argument that cash back is nothing but a rebate against our
expected loss at the casino. Consider that if you purchase a new
car, and the manufacturer sends you a promotional rebate check of
$1000, that money is certainly NOT income. It is just a rebate that
offsets the purchase price of the car - in other words a discount.
For the vast majority of players, this argument that cash back is
like a casino rebate would probably fly. But suppose you are a high
stakes VP player, and you decide to file as a professional gambler.
Your typical play might be slightly negative games like 9/6 JOB or
NSUD with good cash back promotions that make the plays positive.
Your typical year might be to lose $20,000 on the machines, but get
$60,000 in cash back. Now what are you going to do? The IRS won't
let you file as a professional gambler for very long if you keep
showing losses year after year. You may be forced to count cash back
as part of your winnings whether you want to or not, in order to
support your argument that you should be able to file as a pro.
gambler.
EE
--- In vpFREE@yahoogroups.com, spotmoney@a... wrote:
For those filing a tax return, as a professional gambler, what does
the IRS
expect to be reported as gambling winnings aside from the actual
monies won
gambling. For example, does one report cash back, bounce back
checks received in
the mail, comped rooms, comped meals, etc?
Cash back,bounce back checks are consider rebates & are NOT required
to be reported, same for comped rooms & meals.
However,
you better keep EXTENSIVE records with EXTREME details that are TRULY
accurate, do NOT depend on slot club records, IRS consider them
second hand & will only consider them as a backup to your records
MAYBE, if your records show a loss, you better show what you are
doing to correct the "problem" like any other bizness, switchin to
better game, change to casino with more cash back, playin more on
double point days, more time practicing on your computer, consulting
experts in your field, creating a bizness plan, (dont laugh, courts &
IRS expect it) You will be held to them same standard as any other
self employed plus you will have to overcome the "personal pleasure
that is derived from the activity" standard. ( it is ok to enjoy what
you do for a living, but a hobby is not a bizness)
Lack of records and lack of bizness plan are the biggest reasons for
denial of deductions.
An example is a tax payer deducted his expenses for his gold mining
trips to the Mojave Deseart for 10 years, kept perfect records, had a
bizness plan, consulted experts, some years made a buck, mostly not,
Tax Court ruled he was sincere in his attempt, & ruled in his favor
and stated " a person can bealive he can strike oil in Times Square
and why that maybe far fetched if not imposibille , if he gets the
best people and the best equipment and has a plan to acomplish his
goal , this court will not & can not judge how reasonable is his
goal, only on his sincerity to accomplish"
A little more info than was asked for and i am not trying to
discourage anybody, but be aware of what is needed if you get your
deductions denied, and yes my spell checker still broke 
M J Perry
--- In vpFREE@yahoogroups.com, spotmoney@a... wrote:
[Non-text portions of this message have been removed]