Creative Gambling Losses

[pmd62ndst]

I have been fortunate enough to collect two W2-Gs from YouBet.com this calendar year.

Since the year is coming to an end, I've been wondering about creative ways to lower my taxes by being able to claim gambling losses. (Un)fortunately, I have made a small profit on Youbet so I can't show my gambling records to show losses overall for the year.

I've heard a few good ones from my friends:

- Go to the track and gather as many losing tickets off the floor before the cleaning man gets to them. Wouldn't a smart IRS guy figure that you didn't place 1000 bets on every horse on every card for just one day?

- Go to Vegas, tip the pit boss and have him write you up your gambling "losses" for a weekend. In reality, I actually have lost a considerable amount on a Vegas binge. Maybe this will make up for it?

Any other ideas?

PMD

[sq764]

Well, I will have to say grabbing tickets on the floor is a quick way to get yourself audited!!

A guy from work was pretty meticulous about it and it worked.. He hit a $29,000 trifecta and claimed $29,000 in losses.. So he got audited.

He showed up in the IRS office with 5 trash bags full of programs with the tickets stapled inside each program, for the corresponding race day. The IRS auditor looked at 2 books and said get out of here..

[stgeorge]

Yeah, the "tickets off the floor" scam won't work. The IRS requires records to go along with those tickets. So you'll need a log book keeping track of your wagers to support your claims.

[kingfin66]

I don't want to sound like a stick in the mud here, but why not just be honest? It's not worth a big hassle with the IRS if you're just talking about a small profit. Heck, it's not even worth it if you're talking major profits. The good thing is that you are in the black for the year.

[lsbets]

A friend of mine got audited and all he had were losing tickets. The IRS guy told him they looked for an excess in losses of about 30%, figuring that the guys who get W-2 Gs come home winners at the end of the year.

With that being said, the burdern of proof is on the IRS to show that your losing tickets are not actually yours, and that is next to impossible to prove. When Congress revamped the way the IRS works in the 90s, they changed the IRS audit approach. Instead of you being assumed guilty and having to prove your innocence, the IRS now actually has to prove you guilty. Also, they are understaffed and have a hard time keeping up with items that used to be automatic red flags for audits. If you have the losing tickets you are probably going to be okay, they cannot justify the effort that it would take to get a coulpe of hundred extra bucks from you.

Also, instead of picking up tickets off the floor, the bartenders I know at the track keep all the tickets they can find throughout the year, and give them out to the people who tip them well as X-Mas gifts. ;)

[JustRalph]

I had some damn nice winnings and about 10 Tax forms. After deducting losses etc I still had a very nice profit (at least It was for me, bought the wife's car) The Fed. stuff was almost all already taken out, but the State didn't screw around. I had to write a nice check. And they did send me a letter asking some questions. But I sent back records from youbet and Winticket. they signed off and didn't audit me. We did it all by mail. In my opine, the state was a pain in the ass, not the feds. My accountant tells me that the State of Ohio now communicates with the Feds on Gambling winnings. At least they did last year. They had the exact same number that the above services reported to the feds. It was quoted right in their letter.

I say, play it straight and watch out for the state more than the feds. Don't report two different ways..........the penalities in Ohio I am told could wipe out a couple of nice years worth of plays. If they get ya..........

[ranchwest]

No state income tax in Texas. Reduces a lot of headaches.

[VetScratch]

The essence of Revenue Procedure 77-29 is now published in Publication 529:
http://www.irs.gov/publications/p529/ar02.html#d0e1228

When W2-G gross win stotals get large ($100k+), the main focus of an audit will be laundering of unreported income from other sources. Bags of tickets without daily wagering records backed by cancelled checks, plastic card receipts, and deposit receipts will only bring you grief, especially if your main income/loss business is a cash-oriented retail or service proprietorship (e.g., a bar or restaurant).

[wolsons]

Casino's will send you 'Won-Loss' records for the year, which will show the total profit or loss for you at their establishment for the calendar year in question, at least as far as their records are concerned. These are excellent for documenting losses to offset profits in other areas such as your 2 W2-G's for this year. If you had your play rated at the casinos you went to during your Vegas binge (either by using casino players club cards when playing slot machines, or by the pit bosses while playing table games), this may help ya!

Steve

[Fred]

How do you get all your records from youbet? When I am signed in on the site I can only get one month of wagers. What am I missing?

Fred

[alysheba88]

Prepay your property taxes, make a deductible IRA contribution (if eligible), increase 401(k) pre-tax contribution if you have.

Be happy! You won for the year.

PS: People are right about the ticket off the ground nonsense. Utterly meaningless. Keep a log.