If I read that correctly, they got pinned because they forgot to report it, and then when they tried to report it, they tried to take the losses as an itemized deduction, when they took the standard already.
But yeah, this goes to the point of, lets say a P6 player. If said player puts a 4k ticket in, and the P6 hits and pays $2,500, he is forced to report that on his 1040 becuase of the 600/2 threshold.
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