Mr. Pencil Posted January 10, 2014 Report Share Posted January 10, 2014 potentially in line for a holiday named after you Thanks anyway, but I've already got one! http://www.pencils.com/blog/march-30-pencil-day/ Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted January 10, 2014 Report Share Posted January 10, 2014 Wow very interesting. I just read the case. Guy received a 1099-MISC other income for roughly $3,000,000(fair market value of the comps) over a 3 year period. He reported it as other income but took a gambling loss equal to the gains. IRS challenged and he won in tax court. I have never seen anyone 1099'd for the FMV of their comps I just thought the guy volunteered this info to the IRS. WOW, that guy was clearly a "Whale" to get that kind of comps. Of course, the real lesson is that even if you haave millions to play with, it's still a fools game! You can bet that they don't give out comps for more than a small percentage of what you spend. Free drinks are the LEAST of it, they will give those to anyone who is playing, but they don't even track those. It's the free rooms, meals, travel, and gifts that are tracked. High-Roller's get them of varying value depending on how much they spend. But the 'house' always wins in the end. Quote Link to comment Share on other sites More sharing options...
Pacun Posted January 11, 2014 Report Share Posted January 11, 2014 News for all of you; ATM withdrawals are NOT proof of losses or the amount gambled in a session. So if Muldoon was audited, he's got $27,000 of winnings. He might be able to argue that the casino statement is proof, but since there are usually more little wins that don't result in a W2G, the coin in & out isn't an accurate record. A diary is the only proof by regs that is accepted. Yes, you can show the IRS that you started with $500 and that you end up with nothing. That's a record for the day. The court already said that it is not feasible to have one hand on your coins and insert them on the machine, pull the handle and then register you loss on the log with your other hand. This process will be done thousands of times on a day and you will need a couple of notebooks each day you gamble. I know you could argue that you can take your accountant to take notes, but the IRS agrees with the "daily record" without reporting each transaction on the log. Quote Link to comment Share on other sites More sharing options...
Pacun Posted January 11, 2014 Report Share Posted January 11, 2014 Marco, What was the result from your instructor? Quote Link to comment Share on other sites More sharing options...
joanmcq Posted January 11, 2014 Report Share Posted January 11, 2014 Yes, you can show the IRS that you started with $500 and that you end up with nothing. That's a record for the day. The court already said that it is not feasible to have one hand on your coins and insert them on the machine, pull the handle and then register you loss on the log with your other hand. This process will be done thousands of times on a day and you will need a couple of notebooks each day you gamble. I know you could argue that you can take your accountant to take notes, but the IRS agrees with the "daily record" without reporting each transaction on the log. The log is to be kept 'per gambling session' which for slots is until you cash out. So no, you don't record transactions with one hand and pull the lever with the other. But you do need to have the record. An ATM slip won't do. You could have put all the cash into the slot machine, or you could have gone to the buffet & a show before sitting down to gamble. Coins are actually a moot point now; all the casinos I've seen lately use tickets. So the win/loss statement, if you use a loyalty card and should the casino gather the info, has the ability to more accurate as to actual wins & losses rather than just the coin in/coin out I've seen in the past. Quote Link to comment Share on other sites More sharing options...
ILLMAS Posted January 11, 2014 Author Report Share Posted January 11, 2014 Marco, What was the result from your instructor? The $4300 is the correct amount, but a good number of people in the tax seminar got this wrong and I include myself. I can't remember when was the last time I had a client with a W2G for gambling so I was thinking line 21 would be $27K and I would report the loses on Sch A. However in this example, the key was that the man had adequate support, from the ATM withdrawal to the deposit and the fact the he couldn't gamble away the federal withholdings. One thing he made clear, is that to make sure your client prepares a log, casino now a days can give you a print out because most likely not reporting whats on the W2G will get you a letter from the IRS, but having the log can save your client bum. Now what happens if the client doesn't have support for the winnings, he recommends putting the winnings on line 21 and loses on Sch A up to winnings, this response will probably get an argument from some, but it all comes down to having adequate records. I have a sample of the daily log he gave us, I can share it if anyone would want a copy to give to your client. Quote Link to comment Share on other sites More sharing options...
JohnH Posted January 12, 2014 Report Share Posted January 12, 2014 Here;'s another resource regarding gambling diaries. I first found this site after reading a post on this forum, I think. I've gotten their diaries for my clients for several years now. http://www.ladyluckdiary.com Quote Link to comment Share on other sites More sharing options...
David1980 Posted January 12, 2014 Report Share Posted January 12, 2014 Should more than $27,000 be reported as income on the tax return? He had a couple nice jackpots. He probably had a few under $1,200 as well. He might have tried some table games too. Quote Link to comment Share on other sites More sharing options...
Pacun Posted January 12, 2014 Report Share Posted January 12, 2014 Should more than $27,000 be reported as income on the tax return? He had a couple nice jackpots. He probably had a few under $1,200 as well. He might have tried some table games too. Will you agree with this? Let's that this person play the whole night and each of the nights he won $200,000 dollars in little jackpots without requiring the casino to issue a W-2G. On night one, he started with $500 and he had $800 withheld and then he went to sleep with $1,000 after loosing $203,700. The other night that he played, he started with $1,000 and he won 222,000 and they withheld $4,000 and he went to sleep with 0 after loosing $223,000. What amount goes on line 22? The same $4,300. What's matters here is the beginning inventory, what you used for your personal use and the ending inventory. In this case, he had a beginning inventory, he didn't used any for his personal use, and we had the ending inventory. Quote Link to comment Share on other sites More sharing options...
David1980 Posted January 12, 2014 Report Share Posted January 12, 2014 Will you agree with this? Let's that this person play the whole night and each of the nights he won $200,000 dollars in little jackpots without requiring the casino to issue a W-2G. On night one, he started with $500 and he had $800 withheld and then he went to sleep with $1,000 after loosing $203,700. The other night that he played, he started with $1,000 and he won 222,000 and they withheld $4,000 and he went to sleep with 0 after loosing $223,000. What amount goes on line 22? The same $4,300. What's matters here is the beginning inventory, what you used for your personal use and the ending inventory. In this case, he had a beginning inventory, he didn't used any for his personal use, and we had the ending inventory. Yes, I suppose this is true as the original post does indicate the two days were the only gambling during the year. My gambling taxpayers don't always win enough to get W-2G every time they gamble so I was thinking there may have been other winnings outside the two dates, but it's quite clear in the scenario that it's only the two dates. Quote Link to comment Share on other sites More sharing options...
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