Positive TAX Ruling for Gamblers

Tax Court Ruling can be read here...

http://www.ustaxcourt.gov/InOpHistor...ER.TCM.WPD.pdf

Key point is that casual gambler was allowed to NET casino jackpot W-2G with additional slot play. This does not mean you net losses with wins through the year as a casual gambler.

...from ruling
petitioners entered the casino with $500 and took home $1,600 of winnings,
the amount of gambling income which petitioners should have
reported on their 2005 return was $1,100 ($2,000 jackpot winnings
less $500 brought to the casino for gambling and less $400 taken
from the jackpot for additional gambling) rather than $2,000 as
determined in the notice of deficiency.

KEY HERE IS THEY ONLY NEEDED TO REPORT $1,100 and NOT $2,000 W-2G AMOUNT

...also
Drawing an analogy to the recovery of a capital investment,
this Court has held that a casual gambler’s gross income from a
wagering transaction should be calculated by subtracting the bets
placed to produce the winnings, not as a deduction in calculating
adjusted gross income or taxable income but as a preliminary
computation in determining gross income

This would be very beneficial to people who only take the standard deduction or who live in states who have a state income tax which does not allow gambling loss deductions.

To me there should be no difference if a person substitutes casino with racetrack in the above ruling.

[Scav]

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.

Originally Posted by Scav

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.

Exactly, what isn't clear is if you can further reduce the W-2G issued on a race with subsequent losses within that race or day. That is what needs clarification, but for a slot machine player to be able to "net" a day at the casino, shouldn't a horse player also be able to "net" a day at the track.

[Scav]

This one is classic...

http://www.ustaxcourt.gov/InOpHistor...ca.sum.WPD.pdf

I was looking for the Hockman v. Commissioner one but I can't find it...

Originally Posted by Scav

This one is classic...

http://www.ustaxcourt.gov/InOpHistor...ca.sum.WPD.pdf

I was looking for the Hockman v. Commissioner one but I can't find it...

I read your Calif. case and that guy got screwed for not having proof/documentation of losses.

I found Hockman at
http://www.taxesandpoker.com/uploads...man_v_Comm.pdf

[Scav]

Originally Posted by SundaySilence

I read your Calif. case and that guy got screwed for not having proof/documentation of losses.

I found Hockman at
http://www.taxesandpoker.com/uploads...man_v_Comm.pdf

I was more laughing at the descriptions of that case. Thanks for finding that, gonna read it now

[Scav]

Originally Posted by SundaySilence

Exactly, what isn't clear is if you can further reduce the W-2G issued on a race with subsequent losses within that race or day. That is what needs clarification, but for a slot machine player to be able to "net" a day at the casino, shouldn't a horse player also be able to "net" a day at the track.

The answer from me would be yes but as the code is written, the real answer is no.