The elimination of deductions

[showonly]

Correct me if I am wrong but doesn't the new tax plans suggestion of the elimination of deductions put an end to all gambling. I believe without the redefining of gambling winnings it would put a tax burden on any winnings as defined by the IRS regulations.

[HalvOnHorseracing]

Correct me if I am wrong but doesn't the new tax plans suggestion of the elimination of deductions put an end to all gambling. I believe without the redefining of gambling winnings it would put a tax burden on any winnings as defined by the IRS regulations.

It's a little soon to know exactly what the proposed plan contains or doesn't contain. I don't think the news people would say, and at least you can still deduct gambling losses to the level of gambling winnings, even if it was in there. Eventually we'll get all the details.

Changing the tax code will be a huge fight. But we have a long way to go on this one.

[showonly]

It's a little soon to know exactly what the proposed plan contains or doesn't contain. I don't think the news people would say, and at least you can still deduct gambling losses to the level of gambling winnings, even if it was in there. Eventually we'll get all the details.

Changing the tax code will be a huge fight. But we have a long way to go on this one.

Pardon my interest in the current administrations initiatives as far as changes in the tax code. Why don't you post when I should begin to focus my consideration. I guess the the trillions of dollars being maneuvered in the financial markets based on what is being said is misdirected. They should just wait for the details.

[HalvOnHorseracing]

Why don't you post when I should begin to focus my consideration. I guess the the trillions of dollars being maneuvered in the financial markets based on what is being said is misdirected. They should just wait for the details.

When there is a plan on the table and hearings are scheduled you'll have something concrete to comment on. When you know what is being proposed for deductions against gambling winnings, we'll have a great discussion. Meanwhile, why guess? Right now we have a few highlights, but even the congress people are saying they don't know exactly what the bill will look like, and that there are a few versions floating around.

But hey, if you want to go based on what we've seen so far from the news conference and the MSM pundits, you go right ahead.

If you are going to suggest the markets always behave rationally, I'd suggest you have a lot more faith in the markets than I do. What stimulates the markets is the PERCEPTION of stability, and in terms of taxes and regulations that was something they weren't feeling under Obama later in his second term. The markets will go up and down based on some growth projection that came in half a percentage point lower than some guy in a financial firm thought it should. Frankly, I would only trust a market guy who was also a good horseplayer.

[showonly]

When there is a plan on the table and hearings are scheduled you'll have something concrete to comment on. When you know what is being proposed for deductions against gambling winnings, we'll have a great discussion. Meanwhile, why guess? Right now we have a few highlights, but even the congress people are saying they don't know exactly what the bill will look like, and that there are a few versions floating around.

But hey, if you want to go based on what we've seen so far from the news conference and the MSM pundits, you go right ahead.

If you are going to suggest the markets always behave rationally, I'd suggest you have a lot more faith in the markets than I do. What stimulates the markets is the PERCEPTION of stability, and in terms of taxes and regulations that was something they weren't feeling under Obama later in his second term. The markets will go up and down based on some growth projection that came in half a percentage point lower than some guy in a financial firm thought it should. Frankly, I would only trust a market guy who was also a good horseplayer.


Once again at the press conference given by Gary Cohen Director of the National Economic Council and Secretary of the Treasury Steve Mnuchin. The Secretary of the Treasury said all personal deductions other than the mortgage interest and charitable deduction would be eliminated under the plan. if effectuated this would create a dramatically increased taxing of gambling winnings as they are currently defined.


"If you are going to suggest the markets always behave rationally"

Maybe you should start a thread "do markets always behave rationally".

Never said it not going to suggest it.

[Fager Fan]

Once again at the press conference given by Gary Cohen Director of the National Economic Council and Secretary of the Treasury Steve Mnuchin. The Secretary of the Treasury said all personal deductions other than the mortgage interest and charitable deduction would be eliminated under the plan. if effectuated this would create a dramatically increased taxing of gambling winnings as they are currently defined.


"If you are going to suggest the markets always behave rationally"

Maybe you should start a thread "do markets always behave rationally".

Never said it not going to suggest it.

I don't think this is right. Gambling losses isn't a personal deduction, is it? It's a business expense, so should be deductible as that?

[Dahoss9698]

I don't think this is right. Gambling losses isn't a personal deduction, is it? It's a business expense, so should be deductible as that?

Gambling losses are a business expense? :lol::lol::lol:

You're not right. It's a personal deduction.

[showonly]

I don't think this is right. Gambling losses isn't a personal deduction, is it? It's a business expense, so should be deductible as that?

For the recreational gambler gambling losses are taken on line 28 "other miscellaneous deductions" . The "interest you paid" and "gifts to charity" sections could remain in tact while the "miscellaneous deductions" section were eliminated. This would fit the description of the change in deductions described by Mr. Mnunchin.

[HalvOnHorseracing]

Once again at the press conference given by Gary Cohen Director of the National Economic Council and Secretary of the Treasury Steve Mnuchin. The Secretary of the Treasury said all personal deductions other than the mortgage interest and charitable deduction would be eliminated under the plan. if effectuated this would create a dramatically increased taxing of gambling winnings as they are currently defined.


I heard what he said. Gambling winnings are exactly what they sound like. The amount you are ahead after subtracting losses from collections. I'd question if it is technically a personal deduction even if they are taken on Schedule A.

I'd say that if Gary Cohen meant that every source of income (like gambling collections) was taxable but you couldn't deduct the losses or expenses, he'd have one tremendous fight on his hands. Do you think he also meant that you won't get to deduct state taxes? Medical expenses (over the 10% exemption)?

Like I said, whatever he meant will be clear when we get a bill to look at. Then the fun begins.

[dilanesp]

I don't think this is right. Gambling losses isn't a personal deduction, is it? It's a business expense, so should be deductible as that?

If, and only if, you turn your gambling into a business, by, for instance, incorporating, or forming a sole proprietorship.

If you do this, you can net out your wins and losses (so long as wins exceed losses), but it requires professional tax planning asssistance, and it creates a significant likelihood of an audit and can be extremely costly if you don't dot all the i's and cross all the t's.

A recreational gambler can itemize if gambling losses (up to the amount reported as winnings) and any other deductions exceed the standard deduction, but has to report them in a very specific and cumbersome way.

The tax code was written by people who have no idea how advantage gambling works.

[showonly]

I heard what he said. Gambling winnings are exactly what they sound like. The amount you are ahead after subtracting losses from collections. I'd question if it is technically a personal deduction even if they are taken on Schedule A.

I'd say that if Gary Cohen meant that every source of income (like gambling collections) was taxable but you couldn't deduct the losses or expenses, he'd have one tremendous fight on his hands. Do you think he also meant that you won't get to deduct state taxes? Medical expenses (over the 10% exemption)?

Like I said, whatever he meant will be clear when we get a bill to look at. Then the fun begins.

Not correct for the recreational gambler "Gambling winnings' as defined by the IRS are reported on line 21 "other income" on your tax return. The reported amount on line 21 in most cases does not reflect an off set from losses. There is a reporting methodology that can reflect offsets on line 21 the "other income line'. This is used mostly for slots, video poker and live poker. It has the effect of lowering you adjusted gross income and avoids the loss of personal exemptions. As i stated previously offsets are taken on line 28 of schedule A "Miscellaneous deductions".

[HalvOnHorseracing]

Not correct for the recreational gambler "Gambling winnings' as defined by the IRS are reported on line 21 "other income" on your tax return. The reported amount on line 21 in most cases does not reflect an off set from losses. There is a reporting methodology that can reflect offsets on line 21 the "other income line'. This is used mostly for slots, video poker and live poker. It has the effect of lowering you adjusted gross income and avoids the loss of personal exemptions. As i stated previously offsets are taken on line 28 of schedule A "Miscellaneous deductions".

Considering the dozens of times I've had to include winnings and losses in my tax filing, I know exactly how you report. I've been audited on my gambling winnings a few times. I'm up $34 lifetime with the IRS.

I should have said, regardless of how the IRS defines it, gambling winnings are exactly what they sound like - collections minus losses. If the wants to eliminate the deduction for losses, then they ought to change the term to "Gambling Collections" because that would be accurate.

And I also said that regardless of where you report losses, I'd question calling losses a personal deduction. I understand what the IRS calls it. I'm simply saying it is inaccurate. It is an inseparable part of Gambling Winnings.

[showonly]

Considering the dozens of times I've had to include winnings and losses in my tax filing, I know exactly how you report. I've been audited on my gambling winnings a few times. I'm up $34 lifetime with the IRS.

I should have said, regardless of how the IRS defines it, gambling winnings are exactly what they sound like - collections minus losses. If the wants to eliminate the deduction for losses, then they ought to change the term to "Gambling Collections" because that would be accurate.

And I also said that regardless of where you report losses, I'd question calling losses a personal deduction. I understand what the IRS calls it. I'm simply saying it is inaccurate. It is an inseparable part of Gambling Winnings.

For the last time I will tell you that you are wrong. "Gambling Winnings' are reported on line 21 of the 1040 and in almost all cases do not include any offset
In business parlance you might refer to this as top line revenue. The bottom line figure is derived after line 40 incorporates schedule A. Where gambling losses are entered. My tax returns of the last 40 years have incorporated "certain gambling winnings" that far exceed $50 million. I am quite versed in the process. Audits are not a problem when IRS rules are complied with.

[HalvOnHorseracing]

For the last time I will tell you that you are wrong. "Gambling Winnings' are reported on line 21 of the 1040 and in almost all cases do not include any offset
In business parlance you might refer to this as top line revenue. The bottom line figure is derived after line 40 incorporates schedule A. Where gambling losses are entered. My tax returns of the last 40 years have incorporated "certain gambling winnings" that far exceed $50 million. I am quite versed in the process. Audits are not a problem when IRS rules are complied with.

If you could read and comprehend, I said the same thing. I'm disagreeing with the way the IRS defines gambling winnings because winnings cannot be defined other than the net difference between collections and losses. That coming through to you yet?

I said, Regardless of how the IRS defines it, gambling winnings are exactly what they sound like - collections minus losses. You see, that means I know how the IRS defines gambling winnings, but I disagree that it is in fact gambling winnings. I really don't give a shit if I disagree with the IRS - that's what I was trying to do.

I just got done telling you I've reported gambling winnings and losses dozens of times. Of course I know where they go. And did I say audits were a problem? Audits often occur when there is a big difference between consecutive year tax returns in a respective category. Yes, we all know that audits are not a problem if you follow the rules, but they happen anyway.

One last time. I understand the rules. I understand how you report collections and losses. I always did. I SIMPLY DISAGREE WITH CALLING COLLECTIONS WINNINGS AND IF THE IRS WANTS TO USE THE TERM WINNINGS THEY SHOULD DEFINE IT CORRECTLY AND CALCULATE IT CORRECTLY. Is that ok with you? Or are you going to continue to insist that disagreement is the equivalent of incorrectness?

[thespaah]

Gambling losses are a business expense? :lol::lol::lol:

You're not right. It's a personal deduction.
The infor contained in the lionk below, should straighten out this debate..
I think you have it. Looks like this is filed as a personal income return
http://thismatter.com/money/tax/other-income-gambling.htm

[showonly]

If you could read and comprehend, I said the same thing. I'm disagreeing with the way the IRS defines gambling winnings because winnings cannot be defined other than the net difference between collections and losses. That coming through to you yet?

I said, Regardless of how the IRS defines it, gambling winnings are exactly what they sound like - collections minus losses. You see, that means I know how the IRS defines gambling winnings, but I disagree that it is in fact gambling winnings. I really don't give a shit if I disagree with the IRS - that's what I was trying to do.

I just got done telling you I've reported gambling winnings and losses dozens of times. Of course I know where they go. And did I say audits were a problem? Audits often occur when there is a big difference between consecutive year tax returns in a respective category. Yes, we all know that audits are not a problem if you follow the rules, but they happen anyway.

One last time. I understand the rules. I understand how you report collections and losses. I always did. I SIMPLY DISAGREE WITH CALLING COLLECTIONS WINNINGS AND IF THE IRS WANTS TO USE THE TERM WINNINGS THEY SHOULD DEFINE IT CORRECTLY AND CALCULATE IT CORRECTLY. Is that ok with you? Or are you going to continue to insist that disagreement is the equivalent of incorrectness?

In what situation other than your own mind would your personal definition be relevant? The reason the term "winnings" is used is because every ticket cashed with the exception of refunds shows a profit. Thats where the term 'winnings' comes from. I personally have never cashed a ticket where i received less than I bet hence "winnings'". It is literal. The IRS asks you to list the bets on which you showed a profit "winnings" and the later allows you to subtract losing bets or 'gambling losses" or do you have have some preferred term for losses. The thread I initiated was to discuss what would happen if the IRS disallowed Gambling losses. Therefore it is probably best to use their
terminology.

[HalvOnHorseracing]

In what situation other than your own mind would your personal definition be relevant? The reason the term "winnings" is used is because every ticket cashed with the exception of refunds shows a profit. Thats where the term 'winnings' comes from. I personally have never cashed a ticket where i received less than I bet hence "winnings'". It is literal. The IRS asks you to list the bes on which you showed a profit "winnings" and the later allows you to subtract losing bets or 'gambling losses" or do you have have some preferred term for losses. The thread I initiated was to discuss what would happen if the IRS disallowed Gambling losses. Therefore it is probably best to use their
terminology.

Actually, it would be best if they got it right if they do amend the tax code.

[Fager Fan]

If, and only if, you turn your gambling into a business, by, for instance, incorporating, or forming a sole proprietorship.

If you do this, you can net out your wins and losses (so long as wins exceed losses), but it requires professional tax planning asssistance, and it creates a significant likelihood of an audit and can be extremely costly if you don't dot all the i's and cross all the t's.

A recreational gambler can itemize if gambling losses (up to the amount reported as winnings) and any other deductions exceed the standard deduction, but has to report them in a very specific and cumbersome way.

The tax code was written by people who have no idea how advantage gambling works.

This is exactly what I'm talking of doing. Why, if one spends considerable sums and time, would they not set it up as a business? Then not only would the losses go into the expense column, but also there could be other things that do such as the cost of the research (like paying for Ragozin, etc.) that would go into the expense column.

My gambling in the sport is on the other side, owning horses. I wouldn't think of owning horses without setting it up as a business.

As for the cost, it's really not that much if you keep your own books and hire a CPA to do the taxes. If I'm claiming gambling income/expenses, or horses income/expenses, or a business, that's a small price to pay for making sure it's right (and having the IRS look more kindly on the return you filed).

[showonly]

This is exactly what I'm talking of doing. Why, if one spends considerable sums and time, would they not set it up as a business? Then not only would the losses go into the expense column, but also there could be other things that do such as the cost of the research (like paying for Ragozin, etc.) that would go into the expense column.

My gambling in the sport is on the other side, owning horses. I wouldn't think of owning horses without setting it up as a business.

As for the cost, it's really not that much if you keep your own books and hire a CPA to do the taxes. If I'm claiming gambling income/expenses, or horses income/expenses, or a business, that's a small price to pay for making sure it's right (and having the IRS look more kindly on the return you filed).

It was not until Dec. of 2011 that professional gamblers were allowed to write off anything other than losing wagers. http://www.journalofaccountancy.com/issues/2012/apr/20114684.html

this article will be very helpful if your interested.

[Fox]

It was not until Dec. of 2011 that professional gamblers were allowed to write off anything other than losing wagers. http://www.journalofaccountancy.com/issues/2012/apr/20114684.html

this article will be very helpful if your interested.

Not true. I think you need to reread the article. The change in 2011 was with regard to writing off expenses in excess of gains.

[Fox]

This is exactly what I'm talking of doing. Why, if one spends considerable sums and time, would they not set it up as a business? Then not only would the losses go into the expense column, but also there could be other things that do such as the cost of the research (like paying for Ragozin, etc.) that would go into the expense column.


One drawback of filing as a professional gambler would be exposure to the 15.3% self employment tax.

[showonly]

Not true. I think you need to reread the article. The change in 2011 was with regard to writing off expenses in excess of gains.

That was what i was trying to convey. That that was a first. Even with the changes you are still not allowed carry forwards. I have heard that there are some very creative things going on with the use of LLC's.

[showonly]

One drawback of filing as a professional gambler would be exposure to the 15.3% self employment tax.

Exactly

[Dahoss9698]

If, and only if, you turn your gambling into a business, by, for instance, incorporating, or forming a sole proprietorship.

If you do this, you can net out your wins and losses (so long as wins exceed losses), but it requires professional tax planning asssistance, and it creates a significant likelihood of an audit and can be extremely costly if you don't dot all the i's and cross all the t's.

A recreational gambler can itemize if gambling losses (up to the amount reported as winnings) and any other deductions exceed the standard deduction, but has to report them in a very specific and cumbersome way.

The tax code was written by people who have no idea how advantage gambling works.

What percentage of horse bettors do you think turn their gambling into a business and do this?

Less than 5%?

[Track Collector]

What percentage of horse bettors do you think turn their gambling into a business and do this?

Less than 5%?

I know of no good way to determine this, but my guess would be that it is magnitudes less than 5%. Maybe like something like 0.1% or less. (1 out of 1000 or less). As part of the determination, one would also need to define what constitutes a "horse bettor" (like one who wagers X days a year) so as to remove the sub-set of casual players who only play/visit the races a few times each year.

If one were to only include those who play basically 3-4 days every week, I believe the number would be higher than 0.1%, but still well short of 5%. In this category I'm thinking about those who used to be weekend warriors when younger, but are now retired and get to enjoy even more time at the track/otw. They may sincerely work to come out on the plus side, but are unwilling, or simply do not have the skills, to take their handicapping to a higher level. They accept and see the smaller overall yearly losses as the cost of entertainment, which there is nothing wrong with, especially given that it is so very hard to come out a winner consistently in this endeavor.

[Dahoss9698]

I know of no good way to determine this, but my guess would be that it is magnitudes less than 5%. Maybe like something like 0.1% or less. (1 out of 1000 or less). As part of the determination, one would also need to define what constitutes a "horse bettor" (like one who wagers X days a year) so as to remove the sub-set of casual players who only play/visit the races a few times each year.

If one were to only include those who play basically 3-4 days every week, I believe the number would be higher than 0.1%, but still well short of 5%. In this category I'm thinking about those who used to be weekend warriors when younger, but are now retired and get to enjoy even more time at the track/otw. They may sincerely work to come out on the plus side, but are unwilling, or simply do not have the skills, to take their handicapping to a higher level. They accept and see the smaller overall yearly losses as the cost of entertainment, which there is nothing wrong with, especially given that it is so very hard to come out a winner consistently in this endeavor.

I agree

[AndyC]

The infor contained in the lionk below, should straighten out this debate..
I think you have it. Looks like this is filed as a personal income return
http://thismatter.com/money/tax/other-income-gambling.htm

I don't think there is a debate to straighten out. They both understand how the IRS handles gambling collections and losses. The fact that the IRS refers to non-professional collections as "winnings" is ridiculous but it is a valid concern that losses for non-professionals may be eliminated as a deduction.

My view is that by calling collections winnings the IRS has done a big disservice to gamblers. There are many congressmen who believe that writing off gambling losses is a tax loophole. It is paramount to suggesting that a retailer should not be able to write-off the cost of the products they sell to determine their profit.

[AndyC]

This is exactly what I'm talking of doing. Why, if one spends considerable sums and time, would they not set it up as a business? Then not only would the losses go into the expense column, but also there could be other things that do such as the cost of the research (like paying for Ragozin, etc.) that would go into the expense column.

My gambling in the sport is on the other side, owning horses. I wouldn't think of owning horses without setting it up as a business.

As for the cost, it's really not that much if you keep your own books and hire a CPA to do the taxes. If I'm claiming gambling income/expenses, or horses income/expenses, or a business, that's a small price to pay for making sure it's right (and having the IRS look more kindly on the return you filed).

But you still have the pesky little problem of proving hobby vs business.

Because most bettors are losers, setting up as a business really wouldn't fly.

[HalvOnHorseracing]

I don't think there is a debate to straighten out. They both understand how the IRS handles gambling collections and losses. The fact that the IRS refers to non-professional collections as "winnings" is ridiculous but it is a valid concern that losses for non-professionals may be eliminated as a deduction.

My view is that by calling collections winnings the IRS has done a big disservice to gamblers. There are many congressmen who believe that writing off gambling losses is a tax loophole. It is paramount to suggesting that a retailer should not be able to write-off the cost of the products they sell to determine their profit.

Exactly

[Fager Fan]

I don't think there is a debate to straighten out. They both understand how the IRS handles gambling collections and losses. The fact that the IRS refers to non-professional collections as "winnings" is ridiculous but it is a valid concern that losses for non-professionals may be eliminated as a deduction.

My view is that by calling collections winnings the IRS has done a big disservice to gamblers. There are many congressmen who believe that writing off gambling losses is a tax loophole. It is paramount to suggesting that a retailer should not be able to write-off the cost of the products they sell to determine their profit.

I have to say that unless set up as a business, I'm not understanding really why gambling losses should be a deduction. There are more important things to living than gambling that aren't deductible unless set up as a business, and from an outsider view, it seems absurd to allow gambling losses as deductions.

As someone involved with the sport, I may want to see it remain for you, but it does seem absurd.

[Fager Fan]

But you still have the pesky little problem of proving hobby vs business.

Because most bettors are losers, setting up as a business really wouldn't fly.

You can have quite a number of years with a loss, so it may not be as difficult as you think. Handicapping is quite time consuming so think there would be plenty of evidence of it being a business, including a second business or source of income.

[Dahoss9698]

I have to say that unless set up as a business, I'm not understanding really why gambling losses should be a deduction. There are more important things to living than gambling that aren't deductible unless set up as a business, and from an outsider view, it seems absurd to allow gambling losses as deductions.

As someone involved with the sport, I may want to see it remain for you, but it does seem absurd.

If you were a gambler you'd understand.

[AndyC]

You can have quite a number of years with a loss, so it may not be as difficult as you think. Handicapping is quite time consuming so think there would be plenty of evidence of it being a business, including a second business or source of income.

Hobbies can be very time consuming, but time alone doesn't make something a business. If a handicapper is frequently turning a yearly profit there is no problem.

[AndyC]

I have to say that unless set up as a business, I'm not understanding really why gambling losses should be a deduction. There are more important things to living than gambling that aren't deductible unless set up as a business, and from an outsider view, it seems absurd to allow gambling losses as deductions.

As someone involved with the sport, I may want to see it remain for you, but it does seem absurd.


If a person bets for 2 days during the year and wins $10,000 on the first day and loses $10,000 on the second day you believe that it is logical for that person to be taxed on $10,000 of income? You are favoring form over substance. Just because you call something a "business" doesn't necessarily make it a business.

[Fager Fan]

Hobbies can be very time consuming, but time alone doesn't make something a business. If a handicapper is frequently turning a yearly profit there is no problem.

I know time alone doesn't make it a business, but time spent on the activity is something that is weighed. Another is seeking a profit. With horse ownership, it can mean selling a horse, and with handicapping, it would be winning bets.

[Fager Fan]

If a person bets for 2 days during the year and wins $10,000 on the first day and loses $10,000 on the second day you believe that it is logical for that person to be taxed on $10,000 of income? You are favoring form over substance. Just because you call something a "business" doesn't necessarily make it a business.

I understand that they're looking for your net income from gambling. They're treating it somewhat as a business even though the person isn't reporting it as a business. My point is that if they take away this deduction, then it's not the end of the world as you have the option of setting it up as a business as the people on the horse ownership side of gambling in racing do.

[Dahoss9698]

I understand that they're looking for your net income from gambling. They're treating it somewhat as a business even though the person isn't reporting it as a business. My point is that if they take away this deduction, then it's not the end of the world as you have the option of setting it up as a business as the people on the horse ownership side of gambling in racing do.

Again, if you were a gambler, you'd understand.

We get it, you're an owner. How come owners never seem to really understand where gamblers are coming from and without us there'd be no you?

[sour grapes]

i dont see the problem,if you make 10k one day and lose 10k the rest of the year and keep good records you will have zero profit and no tax bill,In the stock market you can lose 100 k and only take a 3k loss each year so their is no way in hell they will let a gambler deduct 10k:pout: in losses a year.

[AskinHaskin]

i dont see the problem,if you make 10k one day and lose 10k the rest of the year and keep good records you will have zero profit and no tax bill,


But that will still cost the average horseplayer plenty of money in the end.


He normally takes the standard deduction of $6800.

In order to offset gambling winnings with gambling losses, he has to itemize his deductions, so he sacrifices the standard deduction just to offset his gambling winnings.


If he wins $5000 one day, and loses $5000 the rest of the year, suddenly he's still paying taxes on the (IRS signer) he landed on the one day, even though he had no racing income. (Because it isn't worth it to itemize, and miss out on the standard deduction, even though that's the only way to offset gambling winnings with losses).


However, when they do a drastic change to the IRS signer thresholds (expected within the next year), much of this topic will be far less significant than it has been over the past 50 years, as there will be FAR fewer IRS scores at U.S. tracks.

[Fager Fan]

Again, if you were a gambler, you'd understand.

We get it, you're an owner. How come owners never seem to really understand where gamblers are coming from and without us there'd be no you?

Just back off. I've ignored your previous posts but you keep on.

I don't care if you want to be snide about the terrible plight of the unappreciated gambler. The owners are also the gamblers in the sport and actually put more money into it than the handicappers do. And guess what? Without the owners, there'd be no sport. So spare me your whining. The bottom line is that if this deduction does go away, then there's an alternative way to handle it.

[AndyC]

I understand that they're looking for your net income from gambling. They're treating it somewhat as a business even though the person isn't reporting it as a business. My point is that if they take away this deduction, then it's not the end of the world as you have the option of setting it up as a business as the people on the horse ownership side of gambling in racing do.

Just because you set your horse ownership up as a business doesn't necessarily make it a business in the eyes of the IRS. There are many factors that need to be present to pass the hobby/business test. Most bettors wouldn't even come close. Many horse owners don't come close either.

It will be interesting to see if the hobby loss rules will be changed to reflect fairness. Paying tax on phantom income certainly isn't fair.

[AndyC]

i dont see the problem,if you make 10k one day and lose 10k the rest of the year and keep good records you will have zero profit and no tax bill,In the stock market you can lose 100 k and only take a 3k loss each year so their is no way in hell they will let a gambler deduct 10k:pout: in losses a year.

If you lose $100K gambling you get to deduct nothing! I don't get to carry the loss forward against future gambling winnings. If you made $10,000 on the sale of a stock and lost $13,000 on the sale of another you would get to deduct $13,000.

[sour grapes]

If you lose $100K gambling you get to deduct nothing! I don't get to carry the loss forward against future gambling winnings. If you made $10,000 on the sale of a stock and lost $13,000 on the sale of another you would get to deduct $13,000.

you should give up gambling if you lose 100k on the horses.

[chadk66]

time to lobby for elimination of tax on any gambling earnings if they aren't going to let you deduct the losses

[AltonKelsey]

The notion that they would be so stupid as to force taxes on FICTITIOUS income boggles the mind.

I guess we assume the worst of all lawmakers.

It's not impossible, nothing is, but I rate the chance of this at less than 1%

[AndyC]

you should give up gambling if you lose 100k on the horses.

Sharp post.

[ReplayRandall]

you should give up gambling if you lose 100k on the horses.
If you put $2 Mil through the windows, a 100K loss would only be 5%, completely acceptable(excluding rebates).....It's all about perception.

[Dahoss9698]

Just back off. I've ignored your previous posts but you keep on.

I don't care if you want to be snide about the terrible plight of the unappreciated gambler. The owners are also the gamblers in the sport and actually put more money into it than the handicappers do. And guess what? Without the owners, there'd be no sport. So spare me your whining. The bottom line is that if this deduction does go away, then there's an alternative way to handle it.

Who's whining? The only whining I see is from you asking me to back off. Sorry you're not able to handle someone pointing out that once again you're talking about something you have no idea about.

I'm real impressed you're an owner. Say it a few more times.

[Fager Fan]

Who's whining? The only whining I see is from you asking me to back off. Sorry you're not able to handle someone pointing out that once again you're talking about something you have no idea about.

I'm real impressed you're an owner. Say it a few more times.

How ya doing, Dahoss? I hope you are having a lovely night.

[Track Collector]

I understand that they're looking for your net income from gambling. They're treating it somewhat as a business even though the person isn't reporting it as a business. My point is that if they take away this deduction, then it's not the end of the world as you have the option of setting it up as a business as the people on the horse ownership side of gambling in racing do.

The point I think you are missing is that the IRS requires the hobbyist/non-professional to show ALL income on Form 1040, line 21, and not the NET amount you gained. It is of course dumb, but that is the what they do. If they do not allow you to subtract the cost of the wagers (or what some folks are calling a deduction) at least somewhere else, then one is truly getting shafted. Just imagine wagering $25,000 in a year, getting all that exactly back in the form of winning wagers thus breaking even, then having to pay tax on the $25,000 as if that were one's NET winnings. :faint: And as pointed out by others, just because you think one always has the option of setting your activities up as a business (to avoid the negatives of being a hobbyist/non-professional) does not mean that the IRS will automatically recognize it. IMO only a very small percentage of those seeking that status will qualify.

With all due respect, I am of a very strong opinion that the IRS views racehorse ownership and gambling on the horses in completely different light. The IRS obtains some of its' revenue from "Sin taxes".

************************************************** *
What is a 'Sin Tax'. A sin tax is a state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. These types of taxes are levied by governments to discourage individuals from partaking in such activities without making the use of the products illegal.
************************************************** *

On the other hand, ownership of racehorses with the intention of earning purse monies from races is clearly viewed as a business endeavor, despite the belief by some folks that ALL businesses are still some type of gamble.

It might be quite natural to want to draw some parallels between the two different endeavors, but in reality they are both actually very different.

[Dave Schwartz]

If you lose $100K gambling you get to deduct nothing! I don't get to carry the loss forward against future gambling winnings. If you made $10,000 on the sale of a stock and lost $13,000 on the sale of another you would get to deduct $13,000.

Actually, I believe you can if you re-file and use the multi-year averaging approach.

However, I am not certain on this. Maybe there are some real tax guys on here that would know.


Regards,
Dave Schwartz

[AskinHaskin]

The notion that they would be so stupid as to force taxes on FICTITIOUS income boggles the mind.

I guess we assume the worst of all lawmakers.

It's not impossible, nothing is, but I rate the chance of this at less than 1%

You don't seem to be very aware.


This is already the reality for 'most' of the unique individuals who reach the IRS signer thresholds at tracks across America in the present.

Those who hit for $4000, or $900 (IRS signers) don't typically itemize their taxes for other reasons, so "most" of them would be foolish to miss out on $6800 worth of the standard deduction in order to declare $4000 (or $900) of losses to offset gambling winnings.

The 'chance' of which you speak has BEEN "100%" for decades.

[lamboguy]

i am going to guess that the total amount the federal government keeps in taxes after deductions in the horse racing game is something relatively small, under $50million a year bottom line, my guess.

it might be a great move for the IRS not tax race winnings at all and just tax the handle one tenth of one percent and they would get more revenue and have less work chasing down the revenue. at the same time it would boost the total racing handle enormously. it doesn't hurt other forms of gambling like casino's either.

[AndyC]

Actually, I believe you can if you re-file and use the multi-year averaging approach.

However, I am not certain on this. Maybe there are some real tax guys on here that would know.


Regards,
Dave Schwartz

Dave, I am a real tax guy!

AndyC CPA

[AndyC]

You don't seem to be very aware.


This is already the reality for 'most' of the unique individuals who reach the IRS signer thresholds at tracks across America in the present.

Those who hit for $4000, or $900 (IRS signers) don't typically itemize their taxes for other reasons, so "most" of them would be foolish to miss out on $6800 worth of the standard deduction in order to declare $4000 (or $900) of losses to offset gambling winnings.

The 'chance' of which you speak has BEEN "100%" for decades.

It can be really ridiculous for seniors who find their social security being taxed due to an increase in "income".

[AndyC]

i am going to guess that the total amount the federal government keeps in taxes after deductions in the horse racing game is something relatively small, under $50million a year bottom line, my guess.

it might be a great move for the IRS not tax race winnings at all and just tax the handle one tenth of one percent and they would get more revenue and have less work chasing down the revenue. at the same time it would boost the total racing handle enormously. it doesn't hurt other forms of gambling like casino's either.

Unfortunately it's not up to the IRS as to what to tax and what not to tax. Thankfully, the IRS has not, for the most part, gone after gamblers who routinely report gambling income improperly on their returns.

I am not against taxing true net gambling winnings. Gambling should not have a higher importance over a person's wages. The problem is in how "winnings" are defined and reported.

[whodoyoulike]

Actually, I believe you can if you re-file and use the multi-year averaging approach.

However, I am not certain on this. Maybe there are some real tax guys on here that would know.


Regards,
Dave Schwartz

Sorry, but, this link states that averaging is only currently available to fishermen, farmers and some retirees since 1987.

Income averaging is a federal tax code provision allowing fishermen, farmers and some retirees to spread their income over a period of years rather than paying a large sum in a single year. It shields fishermen and farmers from the variability of their vocations, allowing years of low income to balance out years of high income. For pensioners, it creates flexibility in how they treat lump-sum payments from retirement plans. Income averaging was available to a wider cross-section of taxpayers before the 1986 Tax Reform Act, which narrowed the provision to its current form. ...


http://legalbeagle.com/6633178-irs-filing-income-averaging-information.html

I just had to look it up because I hadn't heard of income averaging in years.

[ribjig]

> forming a sole proprietorship.

Doesn't need "forming" AFAIK,
only needs a box to be checked...:coffee:

[dilanesp]

i am going to guess that the total amount the federal government keeps in taxes after deductions in the horse racing game is something relatively small, under $50million a year bottom line, my guess.

it might be a great move for the IRS not tax race winnings at all and just tax the handle one tenth of one percent and they would get more revenue and have less work chasing down the revenue. at the same time it would boost the total racing handle enormously. it doesn't hurt other forms of gambling like casino's either.

I actually think that's how all gambling should be taxed. Get rid of the income tax and tax the pool. They would collect far more money, it would be fairer, and it would avoid the current situation where there is almost certainly widespread misreporting.

[cj]

I actually think that's how all gambling should be taxed. Get rid of the income tax and tax the pool. They would collect far more money, it would be fairer, and it would avoid the current situation where there is almost certainly widespread misreporting.

Aren't pools already taxed by the state? I know some states then still tax winnings too. Not sure I want the federal government taxing the pools, which will lead to takeout increases, and then realizing they can double dip too.

[dilanesp]

Aren't pools already taxed by the state? I know some states then still tax winnings too. Not sure I want the federal government taxing the pools, which will lead to takeout increases, and then realizing they can double dip too.


I would only want federal taxation if it were coupled with a repeal of taxation of gambling income.

Honestly the big losers would be advantage players who currently evade taxes.People who currently pay still would but wouldn't have to keep records and go through audits.

[upthecreek]

Current vs Trump plan

[AndyC]

I would only want federal taxation if it were coupled with a repeal of taxation of gambling income.

Honestly the big losers would be advantage players who currently evade taxes.People who currently pay still would but wouldn't have to keep records and go through audits.

You do realize that giving the government a foot in the door always ends badly. Once they get their claws on 1/4% of a pool how tough would it be to pass a bill increasing that to 1/2% or 1%. Gambling is looked at as a sin and no congressman wanting to get re-elected would want to carry the water for gamblers.

[shouldacoulda]

For the recreational gambler gambling losses are taken on line 28 "other miscellaneous deductions" . The "interest you paid" and "gifts to charity" sections could remain in tact while the "miscellaneous deductions" section were eliminated. This would fit the description of the change in deductions described by Mr. Mnunchin.

I consider my losses "gifts to charity" to my fellow parimutuel bettors. lol

[shouldacoulda]

I guess we assume the worst of all lawmakers.



We're used to evaluating past performance. So, yeah!

[AskinHaskin]

Aren't pools already taxed by the state?

Er, well, they were (significantly) in 1990...



I can think of one state where parimutuel taxes paid to the state were down 90% between 1990 and 2014.

And that can't be a stand-alone trend among states.


In fact, by that measure, present-day horse racing is probably getting pretty much what it deserves from most state governments.

[dilanesp]

You do realize that giving the government a foot in the door always ends badly. Once they get their claws on 1/4% of a pool how tough would it be to pass a bill increasing that to 1/2% or 1%. Gambling is looked at as a sin and no congressman wanting to get re-elected would want to carry the water for gamblers.


That is wrong IMO. States tax pools already. While increases do happen, they don't happen that often. Because there are structural forces that push back against it.

[AndyC]

That is wrong IMO. States tax pools already. While increases do happen, they don't happen that often. Because there are structural forces that push back against it.

There would be nothing to push back against the feds.