Assuming you use the full dining credit, do you report this transaction as:
1. A separate $25 gain and $100 loss.
2. A $75 loss
3. Only a $100 loss since the $25 is somehow considered a non taxable comp
Before you say it, I know this will only apply if one files as a non professional gambler. I also know that I'm always better off consulting a tax professional, but I want to make sure that it's just not an obvious answer. And I know that if the answer is either 1 or 2, then we're just talking about a change in AGI, as the net bottom line taxable income will be the same.
In my opinion, I definitely see valid argument for options 1 and 2. I can see reporting it separately because you may redeem the certificate at a later date, which would lend credence to it being a separate transaction. On the other hand, you are expecting to earn that $25 value when you play the game, so it's almost an inherent part of the session (one might not even play if they don't get it); so in that sense, I can see it being part of the session. I also feel like this whole area is gray for the IRS, so you'd probably get different answers from different IRS agents.
Anyway, sorry for the long thread, any help is appreciated.
I would write the day up as a $100 loss in my diary.
Personally, I think #3 is a valid choice. I would write the day up as a $100 loss in my diary.
What BBB said. As I understand it, the IRS agrees free hotel rooms, meal comps, and other freebees are considered non-taxable "inducements to play" given to you by the casino and do not factor in your wins and losses.
As for benefits you get for reaching tiers, I don't have a good argument for that. They are giving you concessions based on certain amount of play, and I agree that no one is deducting the value of valet or discounted buffets. I don't know, maybe technically you're supposed to report those things? Or maybe #3 is the right answer? Or maybe, just maybe, the IRS needs to clarify taxes for gamblers.
Taxing individual gamblers is pretty stupid, IMO, due to the fact that 99.99% of people play a losing game, thus they're EXPECTED to mathematically LOSE yet the government is still like "yeah you're gonna lose that, so give me a chunk of it while you got it" if you're lucky enough to be ahead at any point.
Never forget why the tax code is what it is and do not expect any real changes. The tax code is how politicians reward friends and punish enemies.
I've seen one website claim comps are taxable.Quote: CD
Thanks for the replies. I'm surprised that #3 is the concensus. I thought that if you had to play to win something, then that something was taxable? And if the comp was discretionary (i.e. the casino chooses to give you something), then it's not taxable?
(1) I have a professional gambler friend (part of a pro table/slot team where they even issue members tax forms, and they record machine numbers of slot machines for possible audits), who uses a professional tax accountant, and the tax accountant never asks for comps.
(2) Most websites say comps (food, hotel) are not taxable.