In a message dated 12/12/03 12:42:23 PM, billvelek@alltel.net writes:
<< professional qualification on your part.. Are you an accountant? ... a
tax attorney? ... an IRS employee? ... even a tax preparer such as with
'H & L Block'? ... because if you have nothing else to support your >>
Without going into detail, I must add that even if you have first hand
information, it may still be re-hashed by the IRS and another IRS employee may
reverse the info you previously had.
As a case in point:
I was audited by the underreporting section of the IRS for tax year 1995.
After 6 months of dialogue and opinions by 8 employees in that section (they
don't assign one person to your case), they came up with a solution of me filing
as a professional under Sch C and my calendar/hours on the gambling activity
satisfied them that this was my full time occupation although I had a W-2 from
UNLV as a part-time instructor.
I went blissfully along until this year when I got a IRS transmittal stating
that my gains must be under "other income" and my losses under Sch A
deductions (only to the amount of the winnings). I called the 800 number to ask who
they were as I exclaimed that I had gone over this in length with their
"underreporting" division. The person at the end of the line answered , "this is the
Underreporting Section".
Around and around we went again with some weight in my favor from their own
department's decision of 1995. I have heard the quote that 60% of information
received directly from the IRS is erroneous. I'm back to the 1995 profile
again with a bit more clarity on the diary I keep.
The moral of this story is that until you're called in for a review, keep
good records but nothing is etched in stone as far as promotional freebies, drawn
prizes from tickets you received for playing, cashback vs. bounceback that
must be played through the machine at least once, etc.
I do know that the IRS does NOT want to take anything to the "hearing" level
because of the administrative cost to them. Most of these matters verge on an
extra 2 -3 K tax owing. This, alone, could sway their decision in your
favor. They seem to be more friendly these past years as compared to the 70's when
I was audited for income property component depreciation write-offs.
Good luck out there!