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Originally Posted by Dunbar
CS, this is apparently quoted from some article. What was it?
I agree with some of the article. Filing a Sch. C probably ups your audit chances. But it is hardly a "frightening" prospect. I've been filing a Sch. C for my gambling biz for at least 15 years and have yet to be audited, despite several other oddities and red flags in some of those years. (most notably, 3 years where my joint return used the Foreign Earned Income Credit). I'm also in contact with dozens of other pros who use Sch. C, and audits are rare events. (More often someone will have trouble with his/her state return.) Most serious players do keep fairly meticulous records, so the rare audit usually has a favorable result.
Being a racehorse owner may be an entirely different matter. If a business consistently loses money, then continuing to file a Sch. C would probably invite scrutiny sooner or later.
--Dunbar
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I would think that a professional gambler would be considered in the same vein as a day trader/investor. I would very much doubt that a horse owner could claim the same, though I guess some have tried.