Thank you for this, I was unable to take the course at the time. What kind of documentation would be acceptable for the sessions? bank statement with atm w/d for the initial gamble but what about the other wagers lost on that day?
Hi Laura, any contemporaneous documentation (log, receipts, ATM, deposits). You don't need to track all wins/losses during a session, just the overall gain/loss for a session.
"The better view is that a casual gambler, such as the taxpayer who plays the
slot machines, recognizes a wagering gain or loss at the time she redeems her
tokens. We think that the fluctuating wins and losses left in play are not accessions to
wealth until the taxpayer redeems her tokens and can definitively calculate the amount
above or below basis (the wager) realized. For example, a casual gambler who enters a casino with $100 and redeems his or her tokens for $300 after playing the slot machines has a wagering gain of $200 ($300 - $100)" - From the CCA linked in the article
I guess I'm hung up on two things: The matching program for the W2-G, and the fact that gambling losses can only be claimed on Schedule A, and they don't have enough to itemize. How can they net everything and put it on the other income line?
In this example, there is no wagering loss. There is one session with a wagering gain. This calculation method is supported by both the IRS memo and all the case law on this topic.
The W-2G is not the correct amount to be reported on the return. Here is a footnote in the CCA from above: "We note that § 6041 requires gambling businesses to report payments over certain dollar amounts, “gross receipts” reporting. The amount reported as gross receipts from many types of gambling is not reduced by the amount (basis) of the wager. See Rev. Proc. 77-29, 1977-2 C.B. 538. However, such reported payments are not necessarily taxable wagering gains. A gambling business may issue an information return for a casual gambler’s winning spin, but the gambler continues play and wagers and loses that amount during slot machine play. Wagering gain or loss is determined at the time the casual gambler redeems his or her tokens at the end of slot machine play. "
The IRS recognized the W-2G is not the actual taxable amount. You can disclose any discrepancies.
I've learned a great lesson, thank you!
I think there is a huge problem with the way we report gambling activities on tax returns. We need a Schedule G... :)
Thank you for this, I was unable to take the course at the time. What kind of documentation would be acceptable for the sessions? bank statement with atm w/d for the initial gamble but what about the other wagers lost on that day?
Hi Laura, any contemporaneous documentation (log, receipts, ATM, deposits). You don't need to track all wins/losses during a session, just the overall gain/loss for a session.
"The better view is that a casual gambler, such as the taxpayer who plays the
slot machines, recognizes a wagering gain or loss at the time she redeems her
tokens. We think that the fluctuating wins and losses left in play are not accessions to
wealth until the taxpayer redeems her tokens and can definitively calculate the amount
above or below basis (the wager) realized. For example, a casual gambler who enters a casino with $100 and redeems his or her tokens for $300 after playing the slot machines has a wagering gain of $200 ($300 - $100)" - From the CCA linked in the article
I think that Schedule G is a great idea!
I guess I'm hung up on two things: The matching program for the W2-G, and the fact that gambling losses can only be claimed on Schedule A, and they don't have enough to itemize. How can they net everything and put it on the other income line?
In this example, there is no wagering loss. There is one session with a wagering gain. This calculation method is supported by both the IRS memo and all the case law on this topic.
The W-2G is not the correct amount to be reported on the return. Here is a footnote in the CCA from above: "We note that § 6041 requires gambling businesses to report payments over certain dollar amounts, “gross receipts” reporting. The amount reported as gross receipts from many types of gambling is not reduced by the amount (basis) of the wager. See Rev. Proc. 77-29, 1977-2 C.B. 538. However, such reported payments are not necessarily taxable wagering gains. A gambling business may issue an information return for a casual gambler’s winning spin, but the gambler continues play and wagers and loses that amount during slot machine play. Wagering gain or loss is determined at the time the casual gambler redeems his or her tokens at the end of slot machine play. "
The IRS recognized the W-2G is not the actual taxable amount. You can disclose any discrepancies.