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Originally Posted by Rupert Pupkin
If you save your losing tickets and you can show that despite hitting the exacta that you still lost money gambling this year, then you will have no tax liability. On your tax return, you will need to show that you won the money on the exacta, but along with that information you will need to show that you had losses higher than that amount to offest the win. Then you will not be required to pay taxes on the winnings.
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Rupert, this is true only if you itemize deductions (or if you file Sch. C as a professional gambler). If you take the standard deduction, you are screwed.
http://www.irs.gov/taxtopics/tc419.html
--Dunbar
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Curlin and Hard Spun finish 1,2 in the 2007 BC Classic, demonstrating how competing in all three Triple Crown races ruins a horse for the rest of the year...see avatar
photo from REUTERS/Lucas Jackson
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