I t has been my understanding that slot club cash, as opposed to comps, is considered as a rebate of your purchase of the chance to win at the machines. But if as a result of the slot club cash you come out ahead, then what? I would appreicate input by Jean Scott, Bob Dancer, or anyone else who is fully aware of IRS regulations in this regard. It is not a situation where you win a $1,000 Royal and the casino or others saying it isn' taxable which, by the way is false, but is it similar to purchasing a cellphone for $179 and getting $100 cash back, meaning you still spent $79 and the $100 rebate has never been held to be taxeable, just a lowering of the purchase price. Is slot club cash the same?
[Non-text portions of this message have been removed]
XVP - Treating Slot Club Cash for Tax Purposes
pesach kremen wrote:
It has been my understanding that slot club cash, as opposed to
comps, is considered as a rebate of your purchase of the chance to
win at the machines. But if as a result of the slot club cash you
come out ahead, then what? I would appreicate input by Jean Scott,
Bob Dancer, or anyone else who is fully aware of IRS regulations in
this regard. It is not a situation where you win a $1,000 Royal and
the casino or others saying it isn' taxable which, by the way is
false, but is it similar to purchasing a cellphone for $179 and
getting $100 cash back, meaning you still spent $79 and the $100
rebate has never been held to be taxable, just a lowering of the
purchase price. Is slot club cash the same?
Jean will likely chime in here. I'll offer up what "Tax Help For
Gamblers" <THFG> (Jean Scott/Marissa Chien) discuss. I'll follow with
my own observations.
···
------
THFG states clearly that there's no IRS ruling on this subject, no
definitive consensus among "experts" and advises readers to consult
with their tax preparer in deciding on treatment of cashback.
That said, Marissa takes a definite stand that cashback is gambling
income. Implicit in the discussion is that the cashback be legally
considered your property (e.g., if banned from a casino, you're still
entitled to it).
With respect to free play, she advises that any net win should be
reported as income. In my mind, that's a near equivalent to saying
that the full amount is taxable, but as with other winnings, it may be
offset by losses during it's play through.
------
I'm a corporate/management accountant, not a tax accountant --
consider what I offer to be no more authoritative than that suggests.
(I don't prepare taxes; in a corporate environment, I regularly
consult closely with tax professions/lawyers/code.)
I don't read anything into tax guidance that supports an
interpretation that cashback is a parallel to a purchase rebate.
If you're inclined to frame it that way, consider the following:
Where a purchase is treated as a tax-related event and qualifies for a
deduction, then any rebate reduces the deduction. Inasmuch as this
effectively increases tax liability, I suggest that the rebate is taxed.
I suggest that the reason a rebate on personal property isn't taxed is
become the purchase itself isn't a tax-related event. However, should
the individual take a deduction on the asset (e.g. depreciation of an
auto used for business purposes, in lieu of mileage) then the asset
cost is reduced by any rebate, and the rebate translates into greater
tax expense.
I view cashback in a similar light. If you deduct play loss against
your wins, then those losses must be reduced by your cashback.
Consider that an informed layman's interpretation. Bottom line, all
indications are that this area is sufficiently gray that exclusion of
cashback is a reasonable treatment (or at least one that is very
unlikely to come under examination in a review).
- Harry
I have your answer, but you'll likely have to read around whatever
Wade "Psycho" Wilson will toss in out of even more jealousy and envy.
First off. Jean Scott and Bob Dancer really wouldn't be able to give
you a comprehensive response on this subject, simply because of all the
slot club smoke & mirrors they operate behind and within. I'm sure you
understand by now that all AP's consider slot club benefits as actual
cash for their much-needed profit-claiming purposes, in order to say
they've won year after year after year. Overwhelming value is the order
of the day as required for reputation and credibility. So right off the
bat you're pushing their confusion buttons.
Now the truth about your issue--and there's really nothing complicated
about it. Slot club cash is not to be considered as reportable income
for tax purposes. Do you report credit card cash rebates as income? How
about airline mileage freebie flights? And do you report mail-in
merchandise rebates on your tax returns? Then the IRS says no to slot
club cash. Only when you're handed a 1099 with the "benefit" or "gift"
is it reportable.
--- In FREEvpFREE@yahoogroups.com, pesach kremen <royalflush2222@...>
wrote:
I t has been my understanding that slot club cash, as opposed to
comps, is considered as a rebate of your purchase of the chance to win
at the machines. But if as a result of the slot club cash you come out
ahead, then what? I would appreicate input by Jean Scott, Bob Dancer,
or anyone else who is fully aware of IRS regulations in this regard.
It is not a situation where you win a $1,000 Royal and the casino or
others saying it isn' taxable which, by the way is false, but is it
similar to purchasing a cellphone for $179 and getting $100 cash back,
meaning you still spent $79 and the $100 rebate has never been held to
be taxeable, just a lowering of the purchase price. Is slot club cash
the same?
robsinger1111 wrote:
Now the truth about your issue--and there's really nothing
complicated about it. Slot club cash is not to be considered as
reportable income for tax purposes. Do you report credit card cash
rebates as income? How about airline mileage freebie flights? And do
you report mail-in merchandise rebates on your tax returns? Then the
IRS says no to slot club cash. Only when you're handed a 1099 with
the "benefit" or "gift" is it reportable.
Rob, it should be evident that some gambling activity is taxable even
if it isn't reported via a 1099. Every single win is a taxable event,
for example, no matter the amount.
Re rebates, yes ... they actually are sometimes effectively reported
as "income" -- more accurately, they reduce the amount of the
deduction that you might take against the cost of the item on which
there was a rebate, thus increasing your tax liability.
An example of this is if in lieu of taking a deduction for personal
auto use in the form of a mileage credit you deduct actual expenses.
The value of your car used to calculate depreciation is the purchase
price less any rebate (i.e., what you actually paid in cash).
There's strong cause to make a parallel interpretation of the spirit
of the tax code where it comes to slot cash, whether in the form of
cashback, bounceback, or free play -- treating it as an offset to your
deduction for play losses, should you itemize them.
However, tax code is obscure on the topic and gaming experts have no
fixed agreement on the subject. Consequently, there's every reason to
believe that you're safe in ignoring slot cash in your tax return.
- Harry
--- In FREEvpFREE@yahoogroups.com, "Harry Porter" <harry.porter@...>
wrote:
Rob, it should be evident that some gambling activity is taxable
even if it isn't reported via a 1099. Every single win is a taxable
event, for example, no matter the amount.
I agree. My point really was pertaining only to the numerous gifts &
freebies from the slot clubs. For instance, when they hand you a
leather jacket you don't get a 1099, but if you receive a flat panel
or a car as a year-end gift, you'll get one. None of these items are
considered a win.
Re rebates, yes ... they actually are sometimes effectively reported
as "income" -- more accurately, they reduce the amount of the
deduction that you might take against the cost of the item on which
there was a rebate, thus increasing your tax liability.
An example of this is if in lieu of taking a deduction for personal
auto use in the form of a mileage credit you deduct actual
expenses.
The value of your car used to calculate depreciation is the purchase
price less any rebate (i.e., what you actually paid in cash).
None of that is disputable, however, in an apples-to-apples world if
you receive cash back on your credit card for purchases or you use
mileage for airline tickets instead of spending thousands in cash,
none of that is reportable as "income" just as slot club cash-back is
not reportable as income.
There's strong cause to make a parallel interpretation of the spirit
of the tax code where it comes to slot cash, whether in the form of
cashback, bounceback, or free play -- treating it as an offset to
your
deduction for play losses, should you itemize them.
However, tax code is obscure on the topic and gaming experts have no
fixed agreement on the subject. Consequently, there's every reason
tobelieve that you're safe in ignoring slot cash in your tax return.
> - Harry
I made the above statements from direct knowledge of being audited
and asking specific questions about these issues during my 3 audits
as a professional gambler, as well as obtaining policy determinations
there is varying disgression used by different revenue agents, and if
the taxpayer doesn't make a strong case for his or her argument, the
individual auditor's interpretation of policy may well work against
any of us. In other words, some auditors just don't know enough about
gambling requirements and law, and most taxpayers are equally
ignorant.
···
from my son-in-law's library at the IRS. Still, I've been told that
robsinger1111 wrote:
None of that is disputable, however, in an apples-to-apples world if
you receive cash back on your credit card for purchases or you use
mileage for airline tickets instead of spending thousands in cash,
none of that is reportable as "income" just as slot club cash-back is
not reportable as income.
I'm suggesting "apples-to-apples" comparisons.
Let's start with IRS guidance re rebates: Publication 17:
http://www.irs.gov/pub/irs-pdf/p17.pdf (large document)
Under "Other Income, Cash Rebates" (p87), the IRS states:
A cash rebate you receive from a dealer or manufacturer of an item
you buy is not income, but you must reduce your basis by the amount
of the rebate.
Reduction of the basis of an item is of no tax consequence if you
don't take a tax deduction for the item's cost. However, if you do
take such a deduction, the rebate will increase your tax liability
through a reduced deduction.
What I suggest is that analogous to a reduced deduction due to a
rebate (and we can be talking about an individual's return being
involved here, e.g. via Form 2106), the deduction of gambling losses
would also be reduced by cb/bb/fp.
robsinger1111 wrote:
I made the above statements from direct knowledge of being audited
and asking specific questions about these issues during my 3 audits
as a professional gambler, as well as obtaining policy determinations
from my son-in-law's library at the IRS. Still, I've been told that
there is varying disgression used by different revenue agents, and if
the taxpayer doesn't make a strong case for his or her argument, the
individual auditor's interpretation of policy may well work against
any of us. In other words, some auditors just don't know enough about
gambling requirements and law, and most taxpayers are equally
ignorant.
I'd be extraordinarily surprised if a knowledgeable examiner advised
anyone filing as a professional gambler that cashback doesn't need to
be taken into account in their filing.
That said, as you suggest, not all examiners are knowledgeable when it
comes to the ins and outs of gambling.
My suspicion re a non-pro's treatment of cashback in their return is
that a failure to account for cb would fly under the radar unless the
gambler waived a red flag under the examiner's nose. Were the gambler
to specifically ask about the cashback treatment during an audit, I'd
look for the examiner to err on the side of caution and say it's
taxable (or should be used to reduce any gambling loss deduction).
- Harry
--- In FREEvpFREE@yahoogroups.com, "Harry Porter" <harry.porter@...>
wrote:> I'm suggesting "apples-to-apples" comparisons.
Let's start with IRS guidance re rebates: Publication 17:
http://www.irs.gov/pub/irs-pdf/p17.pdf (large document)
Under "Other Income, Cash Rebates" (p87), the IRS states:
A cash rebate you receive from a dealer or manufacturer of an item
> you buy is not income, but you must reduce your basis by the
amount of the rebate.
Reduction of the basis of an item is of no tax consequence if you
don't take a tax deduction for the item's cost. However, if you do
take such a deduction, the rebate will increase your tax liability
through a reduced deduction.What I suggest is that analogous to a reduced deduction due to a
rebate (and we can be talking about an individual's return being
involved here, e.g. via Form 2106), the deduction of gambling losses
would also be reduced by cb/bb/fp.
One problem with that. The IRS does not require the taxpayer to
reduce the amount of their gambling losses by cb/bb/fp etc. I've
never done it, I've asked the question while in audit, and my
daughter's husband has just informed me that his auditors do not hold
the taxpayer to do that as they would a rebate obtained from the
purchase of an item or service.
> I'd be extraordinarily surprised if a knowledgeable examiner
advised anyone filing as a professional gambler that cashback doesn't
need to be taken into account in their filing.
Then you will be extremely surprised to hear that even after asking
the question in my own audit, I was told I am not required to report
cb in any way, shape or form.
That said, as you suggest, not all examiners are knowledgeable when
itcomes to the ins and outs of gambling.
That may well be the reason. It is my understanding that different
examiners believe different things, and it is therefore left up to
the taxpayer to sort it all out if he wants to prevail or bleed less.
I expect the tax code is so overwhelmingly confusing to all parties
that it may come down to who the stronger personality is during an
audit.
I know a few of you who were stung by Dick Mustain's (mroejacks)
permanent banning, do lie awake for hours each night worrying about
his state of mind and physical well being. So since he can't stop
sending his long-winded private e-mails to me in his continuation of
neurotically trying to "set the record straight" I thought you'd
enjoy how he's doing overall (in relation to his insatiable gambling
habit, that is).
First he's found a new "home base" if you can call it that. Over on
videopoker.com, where at any one time you can see an avg. of a whole
6 viewers reading that garbage, he does the same act as he did on
vpFREE--slick-word the many naiive idiots who have few clues on how
to play vp, making himslef appear the big man on campus; toss in the
usual phoney claims about himself and how he wins "every year"; and
of course, whenever anyone who posts with an articulated intelligence
comes on, he takes issue just like he always did on vpFREE because
the fool just can't fathom anyone depicting more knowledge than he
thinks he has. Oh, and those who post with even the slightest tinge
of agreeing with my views? He immediately claims it's me using an
alias. True paranoia and TOTALLY entertaining. You GOTTA see it!
On the home front, I'm afraid that's not so good---and it rather
interestingly parallels Jean Scott's history. Remember, they both
moved to LV to be closer to the machines, which in my opinion easily
translates into uncontrollable pathalogical gambling problems. I
think it was about 7 years ago when I met Jean and her lover at the
Hard Rock, and during the conversation she emphatically told me that
she would NEVER UNDER ANY CIRCUMSTANCES sell her Indiana home....that
it was their "getaway from the madness of gambling". The best part of
this was that at no time during our conversation could either of them
stop pounding away at the "positive EV" machines, while I calmly
stood by and absorbed the sadness.
Well, low and behold....within the next year she announces her
Indiana home was sold. The Frugal Gambler started climbing up in
denomination. I'll leave the rest of the story for you to struggle
with. How's this relate to my pal little dickey? Gee....he just
downsized from a house to a townhouse. Seems when things go bad, it
comes in clumps--doesn't it?
So now he's taking his frustrations out on me of course. At least he
knows I'll listen. Hey, maybe if one or two of the psycho-babblers
here send him a heart-felt message, his spirits would spring out of
the doldrums!
God Bless America And The Great GWB, and we should all thank him and
our brave soldiers for keeping us safe on our own soil.
And as for Barack "the Muslim" Osama....It won't even be close in
Nov. as true Americans go out to vote, now that the Democratic
sideshow is over and done with.
--- In FREEvpFREE@yahoogroups.com, "robsinger1111"
<robsinger1111@...> wrote:
I have your answer, but you'll likely have to read around whatever
Wade "Psycho" Wilson will toss in out of even more jealousy and
envy.
First off. Jean Scott and Bob Dancer really wouldn't be able to
give
you a comprehensive response on this subject, simply because of all
the
slot club smoke & mirrors they operate behind and within. I'm sure
you
understand by now that all AP's consider slot club benefits as
actual
cash for their much-needed profit-claiming purposes, in order to
say
they've won year after year after year. Overwhelming value is the
order
of the day as required for reputation and credibility. So right off
the
bat you're pushing their confusion buttons.
Now the truth about your issue--and there's really nothing
complicated
about it. Slot club cash is not to be considered as reportable
income
for tax purposes. Do you report credit card cash rebates as income?
How
about airline mileage freebie flights? And do you report mail-in
merchandise rebates on your tax returns? Then the IRS says no to
slot
club cash. Only when you're handed a 1099 with the "benefit"
or "gift"
is it reportable.
--- In FREEvpFREE@yahoogroups.com, pesach kremen <royalflush2222@>
wrote:> I t has been my understanding that slot club cash, as opposed to
comps, is considered as a rebate of your purchase of the chance to
win
at the machines. But if as a result of the slot club cash you come
out
ahead, then what? I would appreicate input by Jean Scott, Bob
Dancer,
or anyone else who is fully aware of IRS regulations in this
regard.
It is not a situation where you win a $1,000 Royal and the casino
or
others saying it isn' taxable which, by the way is false, but is it
similar to purchasing a cellphone for $179 and getting $100 cash
back,
meaning you still spent $79 and the $100 rebate has never been held
to
be taxeable, just a lowering of the purchase price. Is slot club
cash
the same?
So tell us, monkey boy. Have you ever put any cashback on your tax
return?