Professional Gambler Tax ruling

[point given]

is favorable according to this article. Meaning trips to the track, DRF are now deductible.

"
Professional gamblers are now able to deduct business expenses incurred as part of their job.

The catch, however, is determining what constitutes a professional gambler.

A January ruling by the U.S. Tax Court changed a portion of a half-century-old opinion that equated expenses related to a gambling trip with gambling losses -- they were deductible only to the extent of their winnings. .... "


http://www.lvrj.com/business/profess...4.html?ref=244

[Spiderman]

Originally Posted by point given

is favorable according to this article. Meaning trips to the track, DRF are now deductible.

"
Professional gamblers are now able to deduct business expenses incurred as part of their job.

The catch, however, is determining what constitutes a professional gambler.

A January ruling by the U.S. Tax Court changed a portion of a half-century-old opinion that equated expenses related to a gambling trip with gambling losses -- they were deductible only to the extent of their winnings. .... "


http://www.lvrj.com/business/profess...4.html?ref=244

It is good news, but I'll believe it when its in the tax code. I was audited for 2008 and NOT allowed deductions for the expenses - only losses against winnings. Filing an amended return for 2008 will give me a measure of personal satisfaction and a few hundred $$

IRS Memorandum UILC: 165.08-00, 162.00-00, December 19,2008, subject: Professional Gambler's Wagering Losses and Business Expenses denies business expenses for gambling winnings.

Excerpt from the Memorandum:

Of course, a casual gambler not engaged in the trade or business of gambling would not have deductible business expenses. The casual gambler’s expenses to engage in gambling are nondeductible personal expenses under § 262. Like any other taxpayer, a gambler has the burden of proving that his activities rise to the level of a trade or business. See Merkin v. Commissioner, T.C. Memo. 2008-146.

Hopefully, the ruling by the US Tax Court will supercede the above Memorandum.

[rrpic6]

This good news indeed! However, I've been through this exact scenario since 2000. My case was finally resolved in 2004. The only dispute I have with this latest ruling is this:
"To qualify, gambling really has to be a full-time activity that is the person's principal source of livelihood," Patterson said. "It's a pretty high standard that few will be able to meet."

I was able to persuade IRS that it was discriminatory to not allow myself to have two full time jobs and incomes. I was able to prove that I sometimes made more money by gambling on horses than I did at my full time "real" job. But other times my "real" job paid more. It also helped that I paid more in federal taxes one year due to gambling, than I made working at my "real" job.

RR

[Spiderman]

rrpic6,

I'm gathering my documents for 2008 and reviewing rulings on google and emailed the author of article. I will need to get a copy of the US Tax Court Ruling to send along with my amended tax return.

I was successful in an audit in 2000. There was a time when we could file losses v. winnings on a sheet of paper; then make note on the Other line, before Adjusted Gross Income.

[rrpic6]

Spiderman:

My ruling did have a small drawback. I must pay self-employment tax in years that I show a profit. Its worth it since my state, Ohio, would nail me for thousands every year if I was not considered a professional. In Ohio, you must pay tax on your winnings....not net winnings...ALL WINNINGS! Being a professional in Ohio allows me to deduct losses on my state return. Therefore my state return is usually manageable, and even generous, in years where I show a loss.

RR

[Track Collector]

Originally Posted by point given

is favorable according to this article. Meaning trips to the track, DRF are now deductible.

"
Professional gamblers are now able to deduct business expenses incurred as part of their job.

The catch, however, is determining what constitutes a professional gambler.

A January ruling by the U.S. Tax Court changed a portion of a half-century-old opinion that equated expenses related to a gambling trip with gambling losses -- they were deductible only to the extent of their winnings. .... "


http://www.lvrj.com/business/profess...4.html?ref=244

While it may be the most current and visible case, the above is not the first one where it was ruled that one could separate losing wagers from expenses. I was the beneficiary of one of the earlier rulings when my year 2005 and 2008 returns were audited by the IRS. (I do not know the name of the specific case, but the tax consultant/preparer that I currently use was personally involved.).

I am also not aware of any rulings which allow one to carry over losses from one year to the next to offset taxable income in the later year. Until THAT happens, no one can claim that a gambling "business" is treated just like any other business.

As with any other business endeavor, one should always seek the advise of highly qualified tax professional. From personal experience, I can say that it has saved me thousands of dollars.

[lamboguy]

in my opinion, if the federal government stopped taxing all gambling winnings they would collect more money by charging a flat federal tax on the gambling provider whether horse racing or lottery or casino. a flat 1% on all gambling handles will also raise handles for all forms of gambling and increase revenues. there used to be a flat federal gambling tax years ago where this has happened before, i believe the casino industry were the ones to put up the fight against the tax because they paid it and that if gamblerts won they were still responsible for income taxes. most states have a flat tax built in.

[Spiderman]

Secured the US Tax Court Opinion. It is entered in Ruling 155.

While I have grounds to amend tax return for 2008, based on my history with reported winnings. Earnings from business exceeded gambling winnings in 2008. It is likely not worth the time and effort to deal with IRS.

The ruling is a major victory for horseplayers with signers. Thanks for posting.