BHoffman Posted April 8, 2017 Report Share Posted April 8, 2017 Client did not give me all of her W2G forms from 2015 and received a CP2000 letter. I asked her for the Win/Loss statement from the casino. This statement shows total wagers of $550,000 and total wins of $525,000!!! It is broken down by month. I doubt she kept a session diary but will ask her. She is not responding to my calls and emails today. Probably busy at the casino....She is required to respond by April 26th. She is out of town from 04/15 - 04/22. Probably going to Las Vegas.... How in the world do I prepare a response? I've prepared a "Do Not Process" 2015 1040X with the winnings $525k on Line 21 and the same amount as losses on Sch A. She owes about $5,400 that will trigger the dreaded understatement penalty. I am asking for the first time abatement of penalties. I'm stunned at the amounts and afraid the IRS isn't going to simply take the response and her $5,400 payment and call it a day. Any advice would sure be appreciated. Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted April 8, 2017 Report Share Posted April 8, 2017 She can only use the losses incurred on the same day of the winnings reported on the W-2G. Losses go on Schedule A, not subject to 2% and not greater than the winnings. If there is not enough to itemize, then the deduction for losses is lost. (pun NOT intended) Daily losses only. Not weekly, monthly, or annual. Most likely, the CP2000 is correct. 1 Quote Link to comment Share on other sites More sharing options...
BHoffman Posted April 8, 2017 Author Report Share Posted April 8, 2017 Is this something new? Years ago, I had a client with the same problem - CP2000 for unreported W2G forms. I sent the win/loss statement and that was the end of it. I think the unreported amount was around $15,000. Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted April 9, 2017 Report Share Posted April 9, 2017 Three years now. Results of a tax court decision. You should look it up. Quote Link to comment Share on other sites More sharing options...
BHoffman Posted April 9, 2017 Author Report Share Posted April 9, 2017 I just did. Who thinks I should refer her to a nice tax attorney and fire her? Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted April 9, 2017 Report Share Posted April 9, 2017 1 minute ago, BHoffman said: I just did. Who thinks I should refer her to a nice tax attorney and fire her? File an extension. Demand that she get the daily record from the casino so you can properly prepare the return or file with no losses.. If she refuses, hand her back all her source documents and a business card for the closest H&R. Then wish her luck and sleep well. Quote Link to comment Share on other sites More sharing options...
Richcpaman Posted April 9, 2017 Report Share Posted April 9, 2017 B; Your client isn't under audit. Only a CP-2000. Prep the 1040x, with the Sch A. and attach the Win/Loss statement. If the IRS wants more, let them ask for it. Don't worry about proving daily wagering losses. That is all there ever was... 2 Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted April 9, 2017 Report Share Posted April 9, 2017 3 minutes ago, Richcpaman said: B; Your client isn't under audit. Only a CP-2000. Prep the 1040x, with the Sch A. and attach the Win/Loss statement. If the IRS wants more, let them ask for it. Don't worry about proving daily wagering losses. That is all there ever was... So you think B should ignore the tax court ruling and just throw information at the IRS? This will guarantee further correspondence and headache. I would NOT give that advice, nor ask the client to sign such a return. Quote Link to comment Share on other sites More sharing options...
Richcpaman Posted April 9, 2017 Report Share Posted April 9, 2017 B: Your client goes to the casino. She gave you "some" of her W-2G's, but not all of them. What did you do with the first batch when you prepped her 2015 return? Accept that her losses were the same as the winnings? Sure, because she did. Slots are for losers. She lost these additional W2G's as well. The Casino can provide more detailed reports if you need them. Anyone moving $500k thru the machines has a personal rep at the Casino that will provide assistance. 2 Quote Link to comment Share on other sites More sharing options...
Pacun Posted April 9, 2017 Report Share Posted April 9, 2017 This happened to me about 3 years ago. A taxpayer left a few 3K W-2gs when I prepared his taxes. He got a letter from the IRS and he gave me the win/loss statement from the casino. This is what I did: I prepared 1040X and report all W-2g on page 1 then I went to schedule A and reported that same amount and I sent the IRS a letter from the tax payer stating: Dearisimo IRS, In response to your CP2000 letter dated September 20, 2030, enclosed please find: 1.- Form 1040X for year 2028 showing all casino winnings 2.- Win/loss statement from the casino which shows that during 2028, my losses were bigger than my winnings. In support of my 1040X, let me state that I do not play table games, I only play slot machines and those computerized machines keep accurate records of each time I make a wager and I press the spin button. If you need additional information, please do not hesitate to contact me at the address above. Sincerely, Mr. Pacun Gambler We never heard from the IRS again. Do think the IRS will challenge me in court and say.... but you could have left your card out and win big money so your statements will be inaccurate? Then the judge will look at the statistics and see that the casino always win. 1 Quote Link to comment Share on other sites More sharing options...
BHoffman Posted April 9, 2017 Author Report Share Posted April 9, 2017 I just fired her via email. I referred her to a very good tax rep guy who likes to gamble himself, and apologized profusely for my incompetence in not being able to adequately represent her with so much at stake...blah, blah, blah. She came in late, she lied about the gambling and knew she should have told me, and she took the advice of "the casino people" without mentioning a thing to me. What else is she hiding? She's a disaster waiting to happen and I kissed her goodbye, nicely. But, I am pi$$ed. I could handle a smaller at-risk amount, but when the wagers and wins are over a half a million dollars, that's a bit much. Cripes, she only makes salary of around $80k per year. 7 Quote Link to comment Share on other sites More sharing options...
Terry D EA Posted April 9, 2017 Report Share Posted April 9, 2017 Good move at this time of year, well, anytime of year is good for firing a client who cannot tell he truth. You have your suspicions and used good judgement. Rest easy now!! 5 Quote Link to comment Share on other sites More sharing options...
Yardley CPA Posted April 9, 2017 Report Share Posted April 9, 2017 Given the amount of wins / losses, is she a professional gambler? I've never dealt with a professional gambler as a client but wouldn't they be able to deduct expenses? Quote Link to comment Share on other sites More sharing options...
BHoffman Posted April 9, 2017 Author Report Share Posted April 9, 2017 Given the amounts, I'd venture to guess that she is a gambling addict. She's lost over 25% of her gross income, according to these win/loss statements. I feel sorry for her. 3 Quote Link to comment Share on other sites More sharing options...
michaelmars Posted April 9, 2017 Report Share Posted April 9, 2017 1 hour ago, BHoffman said: Given the amounts, I'd venture to guess that she is a gambling addict. She's lost over 25% of her gross income, according to these win/loss statements. I feel sorry for her. You really can't tell from the Casino win/loss statements unless its slots. Table games not every play gets recorded and its easy to "game" the system. An ex-client of mine comes in with a few thousand of winnings and hundreds of thousands of losses. He was a school teacher. Here is how he does it. He has a line of credit established at many different casino's. So lets say he goes down for the weekend and borrows $2000 from casino A, He doesn't settle up till the following week when he goes to casino B, borrows $2000 and pays back casino A. Casino A records him as losing $2000 on the first week since he left without paying back his line. Now the 3rd week he goes to casino C and borrows to payback casino B. This was many years ago and I doubt it would work now because the casino's share information. It was hilarious to see someone making about $90k a year come in with $5-6k of winnings and $200k of losses. 1 Quote Link to comment Share on other sites More sharing options...
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