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$50,000 Preakness Bet
Not a CPA, but used to be a tax auditor. In any case, this is just my OPINION:
The "winning" of the $50,000 bet is NOT a taxable event. It only becomes a taxable event when actual cash or a tangible "prize" is awarded. In other words, if the guy bets the $50k on the 2-1 fave and he collects, then he owes taxes on $150,000. If his choice loses, he has no tax liability. Also, I think your surmising that he would not be able to offset the $150,000 with other gambling losses is correct.
CPA's or IRS wonks? NJ Stinks?
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