MikeH
05-30-2008, 03:56 PM
Copied this from a CPA Tax Forum that I read:
Question that gets asked:
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Hi Group,
Anyone have a definition of a professional gambler ???
Taxpayers (H & W) spend most of their time casino gambling on slot machines. Their gross (winnings) are 10 times their other income. OF course they have a net loss from the gambling activity. Can this be reported on SCH C ??? Each year has had and will have a LOSS until all their money is gone....
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Answer:
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From the PPC 1040 Deskbook:
Where gambling losses are reported on Form 1040 depends on whether the taxpayer is in the trade or business of gambling. While most individuals are not *professional* *gamblers*, the Supreme Court ruled in Groetzinger that an individual could be in the trade or business of gambling (i.e., a *professional* *gambler*) if he pursued gambling full-time, in good faith, with regularity, and as a livelihood rather than as a hobby. In that case, the taxpayer had no other employment and gambled full-time at pari-mutual dog racing. The Court found that his activity required skill, which he applied, and was more than a mere hobby. In Castagnetta , the taxpayer held a part-time job in addition to
spending about 40 hours per week carrying on his gambling activity (horse racing). Even though the taxpayer was employed part-time in a job unrelated to gambling, the Tax Court held that the amount of time devoted to his gambling qualified this activity as a trade or business.
Consequently, the taxpayer can deduct his gambling losses on Schedule C as business expenses and not on Schedule A as miscellaneous itemized deductions.
Question that gets asked:
===================
Hi Group,
Anyone have a definition of a professional gambler ???
Taxpayers (H & W) spend most of their time casino gambling on slot machines. Their gross (winnings) are 10 times their other income. OF course they have a net loss from the gambling activity. Can this be reported on SCH C ??? Each year has had and will have a LOSS until all their money is gone....
====================
Answer:
====================
From the PPC 1040 Deskbook:
Where gambling losses are reported on Form 1040 depends on whether the taxpayer is in the trade or business of gambling. While most individuals are not *professional* *gamblers*, the Supreme Court ruled in Groetzinger that an individual could be in the trade or business of gambling (i.e., a *professional* *gambler*) if he pursued gambling full-time, in good faith, with regularity, and as a livelihood rather than as a hobby. In that case, the taxpayer had no other employment and gambled full-time at pari-mutual dog racing. The Court found that his activity required skill, which he applied, and was more than a mere hobby. In Castagnetta , the taxpayer held a part-time job in addition to
spending about 40 hours per week carrying on his gambling activity (horse racing). Even though the taxpayer was employed part-time in a job unrelated to gambling, the Tax Court held that the amount of time devoted to his gambling qualified this activity as a trade or business.
Consequently, the taxpayer can deduct his gambling losses on Schedule C as business expenses and not on Schedule A as miscellaneous itemized deductions.