vpFREE2 Forums

[vpmail2] Re: IRS auditing - regarding drawings/tournaments

#1

<<As for casinos issuing W2Gs instead of 1099s, I think that it's illegal when
the situation calls for a 1099. So you may be avoiding a current problem for
a future problem when the casino itself is audited & IRS may have the W2Gs
reissued as 1099s which could trigger some problems for their customers.>>

I don't think this is a clear-cut legal/illegal issue. Even the casinos aren't "standard" in what they do, i.e, some issue W2's for cashback over $600 while most do not. Some add all the tournament amounts for the year and give a 1099 if the total is over $600. Some only issue 1099s if one tournament win is over $600.

I did hear that one casino had a specific arrangement with the IRS to give W2Gs for tournament wins, but I can't remember which one or how long ago I heard this. So that means the IRS itself has to interpret their "rules" at times. I know different casinos do things differently for live poker as far as what forms they issue for what.

Very little about gambling and taxes is clear cut!!!

Brad and I ourselves DO count tournament and drawing wins as gambling income although this is easier if you are filing as a professional gambler. But I know many recreational gamblers who do so also and have survived audits. That being said that does not mean any one person won't get audited about this. And the results in an audit depends so much on how much or how little the auditor knows about gambling - plus how well you or your representative explains your case. I wouldn't go to an audit without professional help.

Someone on Skip's list mentioned that he keeps tournament and drawing literature that spells out how they are connected to your regular gambling. That is a great idea, great supporting evidence if you are ever audited.

···

________________________________________
Jean $¢ott - "FRUGAL VIDEO POKER"
This new book (autographed) and other
   frugal products are now available at my
   new Web site, http://queenofcomps.com/.
   E-mail address is queenofcomps@cox.net.

[Non-text portions of this message have been removed]

#2

queenofcomps wrote:

I don't think this is a clear-cut legal/illegal issue. Even the
casinos aren't "standard" in what they do ...

This goes well beyond the inconsistencies in casino reporting of
sweeps, tourney, etc. wins.

The simple fact is that the IRS code consists of standardized rules
that attempt to implement public policy in an equitable manner.
However, there are always going to be cases that don't neatly fit into
a general rule.

I once worked closely in conjunction with a corporate tax department,
They're compliance efforts were in part targeted to arrive at a tax
interpretation as favorable to the firm as possible but still fully
consistent with the code. It's simply understood that it's not a
cookie cutter world. They expected to defend certain positions in an
audit, but were prepared to amply demonstrate the rationality of their
position.

The same principal goes for the individual when dealing with a unique
circumstance. The nature of gaming reporting and the relationship of
casino 1099 generation to gaming activity is one such instance.

I take the position in my return that the 1099 income is a component
of my overall gaming activity and report it accordingly, making sure
to delineate what portion of my reported wins were derived from 1099
income.

I haven't been challenged yet. Should I receive a letter audit at
some time I'm fully prepared to concisely and rationally defend my
filing. Among other things, I expect I would obtain a statement from
the reporting casinos that participation in the event was dependent
upon recording a given level of gaming activity.

I would be very surprised if things advanced from there to a sit down
with an examiner. It's possible that the rep reviewing my reply will
be unfamilar with gaming and things might go the extra step. And, if
at some point I actually manage to tote up more than a couple K in
1099's, that too might trigger a more detailed review. In either
case, I wouldn't be excessively concerned going into the review and
would wait to see how things pan out before taking extraordinary steps.

Of course, speculation is one thing, experience with an actual audit
(should one arise) is another.

- Harry

#3

give W2Gs for tournament wins, but I can't remember which one or how
long ago I heard this.

Could it have been the Barbary Coast?

They gave me a W2G for $5000 in the invite tourney.

Jacob

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--- In vpFREE@yahoogroups.com, "queenofcomps" <queenofcomps@...> wrote:

I did hear that one casino had a specific arrangement with the IRS to

#4

Last year, the Flamingo handed me a W2G for winning a slot tournament that I
was invited to. I do not know if it was a mistake on their part or if they
had an arrangement with the IRS.

This is the only time I have received a W2G instead of a 1099 for tournament
winnings.

···

--- In vpFREE@yahoogroups.com, "queenofcomps" <queenofcomps@...> wrote:

I did hear that one casino had a specific arrangement with the IRS to

give W2Gs for tournament wins, but I can't remember which one or how
long ago I heard this.

[Non-text portions of this message have been removed]

#5

<< I did hear that one casino had a specific arrangement with the IRS to
give W2Gs for tournament wins, but I can't remember which one or how
long ago I heard this.

Could it have been the Barbary Coast?

They gave me a W2G for $5000 in the invite tourney.>>

That could be - sounds familiar.

The point we have to remember is that there is no clear-cut policy for anything connected with gambling and taxes. Note that one of the clearest things in the tax guide is that you need to record gambling "sessions," even though they don't say exactly what a session is. And hundreds of thousands do it by sessions and it is not questioned. Then someone does it by sessions and someone in the IRS is unknowledgeable about gambling and says you need to use your W2G figures.

For this reason I would strongly suggest that you use a professional, like an EA (enrolled agent), to handle an audit when you have done all you know to do personally and the IRS is not seeing it your way.

···

________________________________________
Jean $�ott - "FRUGAL VIDEO POKER"
This new book (autographed) and other
   frugal products are now available at my
   new Web site, http://queenofcomps.com/.
   E-mail address is queenofcomps@cox.net.