Tax question

If 95% of the gamblers cannot disturb the IRS with facts because they are such a horrible agency, there's not much stopping people from ignoring the IRS except when they fill out a jackpot form. I haven't seen a year-end casino player print-out yet though.

Quote: AcesAndEights

I'm not an expert on this, but I believe when you use free play to play a game, any income from that session is still taxable, you just don't have any "basis" in the session. E.g., your net win doesn't include a deduction for your buy-in, since your buy-in was free. I.e., your jackpot is still taxed. Sorry.

I have not done my research, either, just what was said here so far. However...that seems to be a major, positive change in the tax law. What you said is how it has been until this year. The question is, whether the law has changed to allow comps/fp earned, and the proceeds from same, to be tax-free. IMO, that question has not been definitively answered either way.

It is a long-standing rule with the IRS that you can file in whatever way best benefits you. I don't know that casinos will stop issuing W2Gs on comp wins on Jan 1, though, and so the IRS will still probably use them to gauge people's gambling income, regardless of offsets.

Too bad the political threads pi$$ed off the only CPA I know of on here. He might be able to tell us.

Quote: Wizard

Good post, thanks. I was doing some research too, to try to challenge you, but this article (Taxation of Gambling: Rakeback and Casino Comps) seems to agree with you.

The original question was whether a slice of pizza paid for with slot points is taxable. It would seem that if it was paid for with points, it's not. However, if it was a no-strings-attached offer, like a coupon to get people through the door, it would be.

If this tangent gets more than a few more posts, I'll split it off.

Many casino eateries do not charge sales tax when you pay with club points.

Quote: AcesAndEights

I'm not an expert on this, but I believe when you use free play to play a game, any income from that session is still taxable, you just don't have any "basis" in the session. E.g., your net win doesn't include a deduction for your buy-in, since your buy-in was free. I.e., your jackpot is still taxed. Sorry.

I got a W2-G when I hit 4 Aces for $4,000 on $5 DDB single line.

This was second hand on free play that day. I put $25 in to start must have hit something on first hand to get credits up which is why I had $100 left on machine after they paid me the 4K. Had to have been 3 of a kind which would have bumped it to $100 credit. This was on September 4th of this year when I still played all my free play on $5 single line.

Now I remember why there is a $100 credit. I hit it on my 1st hand and it ate my $25 buy in and deducted $25 from my freeplay. So it screwed me out of $25. I had to put in a $100 bill to play the rest of my freeplay. But I wanted to get a picture of what happened.

I cant really say not to get a jackpot on freeplay because of this because hey, it's losing $25 to win 4 grand. Technically I got screwed but it had a happy ending. (Double entendre intended)

Quote: beachbumbabs

Too bad the political threads pi$$ed off the only CPA I know of on here. He might be able to tell us.

That's what the political threads here have done to many "good" posters on the forum, imo.

Do slot machines go cold when you’re given free play? https://www.freep.com/story/entertainment/nightlife/2015/08/19/mark-pilarksi-casinos-free-play-slots/31913489/

Quote: ChumpChange

Do slot machines go cold when you’re given free play? https://www.freep.com/story/entertainment/nightlife/2015/08/19/mark-pilarksi-casinos-free-play-slots/31913489/

Wow really?

Absolutely not!

I play thousands of dollars of freeplay a day. It has no affect on the machines

Quote: GWAE

I do wonder if you could fight a w2g saying the session resulted in a zero gain, even though you have a w2g. In that case your agi would not be affected. My guess is the IRs employee would not understand the difference and it wouldn't matter.

I self filed and I didn't list a single W2G in 2016. Earlier this year I got a letter saying "What about these 80 W2-G's we have? Please send us $30,000." Russ Fox the Vegas tax attorney told me what to write to the IRS in my letter and what numbers had to change on my Schedule C.

Basically I had listed $50,000 gambling income and no losses. They wanted to see $255,000 gambling winnings and $205,000 losses on my forms. That's all I did was change those two numbers and explain what I did. A month later night got a letter saying I owed $0. I was surprised they understood it right away.

Quote: BTLWI

Basically I had listed $50,000 gambling income and no losses. They wanted to see $255,000 gambling winnings and $205,000 losses on my forms. That's all I did was change those two numbers and explain what I did. A month later night got a letter saying I owed $0.

hopefully they stay away forever on that one and do not come back to you in another year wanting to see your records of losses adding up to $205,000. IF I was IRS, I would want to see your documents showing you lost $205,000 as most can not produce that

Quote: BTLWI

I was surprised they understood it right away.

not a very good assumption that IRS did understand it.

I have had 6 rounds over my lifetime with IRS and won them all.

They, each time, in writing, said they were right and I had to show proof I was right, making them wrong.
easy to do when you do have the proof as I did each time.
and they wanted the proof every time.
I am not a professional gambler according to the IRS rules and guidelines on that.

sounds like you fell into a crack
Enjoy the win!