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  • An Introduction to Gambling Winnings Since Congress first adopted a comprehensive system of taxation, much confusion over the treatment of “gambling winnings” has ensued.  Unfortunately, the Congress has done little to resolve this confusion.  As a consequence, Taxpayers, their tax advisers and the IRS have frequently relied upon the Courts for interpretation and guidance. Gambling Income IRC Section 61 is the starting ...
  • An Introduction to Wagering Losses It is well-established that deductions from gross income are a matter of legislative grace, to be bestowed or withheld by Congress.  See New Colonial Ice Co. v. Helvering, 292 U.S. 435 (1934); Winkler v. United States, 230 F.2d 766 (1956); Hochman v. Commissioner, T.C. Memo. 1986-24 (1986); INDOPCO, Inc. v. Commissioner, 503 U.S 79 (1992); ...
  • Form 1040: How to report your Gambling Winnings But where do you report them on? Page 29 of the instructions for the 2009 IRS Form 1040, tells us to use Line 21 “Other Income” on Page 1 of Form 1040 to report “Gambling winnings, including lotteries, raffles, a lump-sum payment from the sale of a right to receive future lottery payments, ...
  • Taxation of the Recreational Gambler Overall, the reporting requirements for gamblers are quite easy. The gambler must report all his gambling winnings as “other income” on the first page of his IRS Form 1040. This includes winnings reported on IRS Form W-2G’s ($1,200 or more for slot machines) as well as any other amounts from any other gambling ...
  • The J+O-I of Gambling Income Much confusion exists about gambling income and how it is calculated.  For instance, IRC 165(d) does not even use the term “income” – it mentions losses, gains and transactions – but, it never mentions the term “income.” So how is “gambling income” calculated? The mnemonic “J+O-I” is the easiest way to remember the “gambling income” formula. “J” = ...
  • What Happens When a Gambler Recycles His Winnings? “So, where did you get all that money to lose?” is a frequent question that gamblers are asked by the IRS, their significant others and their tax advisors. Frequently, the gambler is holding a fistful of W-2G’s, simply shrugs his shoulders and replies, “Besides the amount I started with, I just kept gambling with ...
  • What is a “Gambling Session”? Section 165(d) of the Internal Revenue Code requires that you separately list your WINNINGS and LOSSES – and that is all it says! Does this mean that the Gambler/Taxpayer has to record each bet – literally, each pull of the slot machine? Each roll of the dice? Each draw of a card? NO! Over the ...
  • Why Does the IRS Ignore Casino Win/Loss Statements? Many gamblers mistakenly believe that they do not need to keep a gambling diary because the casinos can provide them with the necessary information to satisfy the IRS. Unfortunately, these same gamblers find out too late what the IRS already knows – the casinos themselves do not consider their information sufficiently reliable for tax purposes. Listed ...
  • Are “Comps” Taxable? The bad news.  Probably yes, “comps” are taxable.  The good news.  It probably will not make much of a difference.  And, it may even help. So what is going on? Well, it is common industry practice for a casino to voluntarily provide complimentary goods and services (“comps”) to favored patrons.  Such “comps” can include food and drinks, ...
  • Taxation of the Recreational Gambler Overall, the reporting requirements for gamblers are quite easy. The gambler must report all his gambling winnings as “other income” on the first page of his IRS Form 1040. This includes winnings reported on IRS Form W-2G’s ($1,200 or more for slot machines) as well as any other amounts from any other gambling ...
  • Why Does the IRS Ignore Casino Win/Loss Statements? Many gamblers mistakenly believe that they do not need to keep a gambling diary because the casinos can provide them with the necessary information to satisfy the IRS. Unfortunately, these same gamblers find out too late what the IRS already knows – the casinos themselves do not consider their information sufficiently reliable for tax purposes. Listed ...
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