Tax question

Quote: darkoz

Quote: MichaelBluejay

Quote: UP84

Quote: Mental

Quote: darkoz

MJB got it completely backwards.

Comps given as gifts are taxable as income. Anything earned through play like Freeplay from prior play or points or free rooms are considered REBATES on prior purchases and are not taxable.link to original post

I have darkoz blocked, but when someone is quoted two levels deep the blocked post still shows, so I saw the above.

Anyway, If I got it completely backwards, then so did CPA Marissa Chien, the Wizard, and tax attorney Brad Polizzano. Those are the sources I cite.

I don't believe I got it backwards, as I haven't seen any credible sources to the contrary.
link to original post

Unfortunately MBJ has me blocked so will continue with incorrect information.

Credible source:. How about the IRS and Forbes!




link to original post

I just unblocked you.

I believe DarkOz over whoever MJB referred to in this dispute over paragraph 7. But I'm not calling the IRS to find out.

I've got some Freudian slip dyslexic typing going on. Sorry. Lol.

Quote: ChumpChange

I believe DarkOz over whoever MJB referred to...

It's MBJ, not MJB.

Actually, Dark and MBJ can both be right. The taxable that MBJ's sources are referring to are those slot dollars that accrue from playing the games. The Freeplay that is awarded as result of past play is not that type of accrued awards. For example, I was at a MGM property two weeks ago. When I booked my room, it was on an offer that included $25 in Freeplay. That $25 is not taxable income. However, while staying and playing there, I accrued say $25 in Slot Dollars at a fixed rate based on coin-in. Those slot dollars would fall under the MBJ expert's definition of taxable income, were I able to play those Slot Dollars directly, or buy a buffet pass. Fortunately, they can only be converted to Freeplay, and under the MGM Freeplay system, they become rebates of prior bets, even though the prior bet is made immediately before the rebate. However, under the MGM system (and others like it such as Identity Play at The Cosmopolitan of Las Vegas, and maybe Caesar's rewards as well - this system in probably in effect at most shops, as it removes ambiguity of taxable events) all winnings are taxable income, as you are betting with your own cash, as you bet before the rebate.

If DarkOz maintains that winnings from any rebate bet are included under the rebate exception, I'm going to need a Revenue Ruling, or private letter ruling, or a tax court case citation before I am convinced that these don't fall under the "Except as otherwise provided" by law, gross income means "all income from whatever source derived," standard; that is, provide the "Except as otherwise provided" part.

EDIT: Removed silly mistake

Cashback is a popular gambler benefit about which the IRS has yet to make a ruling. As with many tax issues vis-a-vis gambling, there’s no consensus on how to treat it, even among tax experts.

Casinos usually don’t issue 1099s for cashback, even if you collect a large amount at one time. However, a very few casinos do issue a 1099 if it’s more than $600, treating it as a prize, or they give a W-2G if more than $1,200, treating it as a machine jackpot.

And to confuse matters, some casinos give you a choice of cash or comps for the points you earn in their players clubs. Thus, many players believe that cashback falls under the same category as comps, a reward from the casino that’s not gambling income. Others feel it’s more like a rebate of some of your losses and should reduce the total losses that you report. This is another gray area and you need to discuss your particular situation with your tax preparer.

https://www.lasvegasadvisor.com/question/cashback-irs/

Marissa Chien, Enrolled Agent and co-author of Tax Help for Gamblers (Fourth Edition), tells her clients that cashback is gambling income, whereas free buffets aren’t. The standard she applies is that cashback is statutory, while a comp from the players club booth or your host, such as the free buffet, is discretionary. Since the comp is entirely up to the host’s discretion — i.e., he or she could refuse to issue it for any reason— to Marissa, that doesn’t fall under the definitions of income in the tax code. Cashback is earned pursuant to a particular formula and you’re entitled to that cashback if you meet the statutory requirements of earning it.

The biggest argument as to why cashback is income is that if you’re 86ed (barred) from a Nevada casino, Nevada Gaming Control has ruled time and time again that you’re entitled to the cashback earned, whereas comps in your comp account are forfeited, since they’re discretionary.

**********************
I ran across this link for a google book. Page 30 Cashback And Free Play: https://tinyurl.com/2xsavx94
******************
In my little world, the points on my Player's Card cannot be converted into cash, they can be used for something from the food court or to get 1/2 value on free play only on Thursdays; so they are not taxable. If I can get concert tickets with points, I don't know yet.
*****************
From a post from another anonymous forum: I will confirm what *** said, and I have had similar wins. I was called in a drawing where there were several winners of $1000 cash. Each of us collected at the cashier, and were given a 1099 tax form (not a W2G) and a copy was sent to the IRS. It was a 1099 since it was a drawing that had no fee to enter, as opposed to a slot win. Then another time I was called in a drawing and won $10,000 freeplay. There were no tax forms on that.

Quote: darkoz

Quote: Mental

Quote: ChumpChange

So my second-thoughts about exempting the FSP amount from the win amount is in error?
$100 FSP buy-in, $300 cash-out = +$200 session?
link to original post

Your cash buy-in is zero. By cash accounting, this is a +$300 session. If you are playing online, there is no cash involved at any point in the session. Your balance has just increased by $300. Seems like gambling income to me.
link to original post

Your definition of gambling income is incorrect.

In your example the promo credits caused your balance to go up by $300. Now can you cash that out with zero playthrough? If so you are correct.

If not then you haven't had any income yet! I don't know of any online or B&M casino currently where Freeplay can simply be downloaded and then cashed out with zero play. Because it's not cash nor income yet.
link to original post

In the example given by ChumpChange, the FSP was played through generating a win and the win was explicitly cashed out. A TITO voucher is effectively cash, so the $300 of gambling income has been earned and realized.

If I have the same session experience online, the the $300 of gambling income has been earned and realized. Where did the $300 come from if the $100 of FSP has not been played through?

There are several casinos that I know of where there is no play-through requirement for for some or all bonuses. If you meet the promotion requirement, your balance is credited with a bonus. Would you agree that this bonus is gambling income the second the bonus hits your online credit balance as a withdrawable balance? Or is it never income in your mind?

Quote: ChumpChange

Marissa Chien, Enrolled Agent and co-author of Tax Help for Gamblers (Fourth Edition), tells her clients that cashback is gambling income, whereas free buffets aren’t. The standard she applies is that cashback is statutory, while a comp from the players club booth or your host, such as the free buffet, is discretionary. Since the comp is entirely up to the host’s discretion — i.e., he or she could refuse to issue it for any reason— to Marissa, that doesn’t fall under the definitions of income in the tax code. Cashback is earned pursuant to a particular formula and you’re entitled to that cashback if you meet the statutory requirements of earning it.

The biggest argument as to why cashback is income is that if you’re 86ed (barred) from a Nevada casino, Nevada Gaming Control has ruled time and time again that you’re entitled to the cashback earned, whereas comps in your comp account are forfeited, since they’re discretionary.


link to original post

Yeah this Marissa Chien's analysis is so idiotic that it should be removed and wiped clean from the internet. Unfortunately she was touted as an expert while giving BS advice

For one thing the analysis is that Cashback is income because it's accrued at a particular formula. ARE YOU KIDDING????

What employees at what company PAY THE BOSS for their wages??? The Cashback and players club points formula is based on the patron making wagers. A standard formula is making a $5 wager gets you one point accrued which is worth one penny Cashback for shopping. Even if the formula is different the method (you get points based on wagers you make) is not.

Her analysis means patrons are WORKING for the casinos by gambling and making a wage at a penny a point (after having handed over $5 or thereabouts).

The fact this Marissa Chien can't recognize that's a PATRON/BUSINESS relationship and not an EMPLOYEE/BUSINESS relationship just disqualifies everything she says in my opinion.

You are a patron making a purchase (a gambling wager) and receiving a Cashback reward (a rebate in the form of a point on your players card).

THAT'S IT! The last thing you are is an employee of the casino making an income from earning points.

Even her analysis of the Nevada courts making casinos honor points is wrong. They didn't rule that way because players were owed their wages. They ruled that way because players were owed what they had paid for.

Based on her theory when you buy a sofa and it's not delivered and the court makes the furniture company honor the deal that's a wage income. Ridiculous!

As usual we live in a world with so-called professionals who just have no common sense.

Quote: darkoz

As usual we live in a world with so-called professionals who just have no common sense.

That may be your problem. Common sense has nothing to do with the IRS.

Quote: Mental

Quote: darkoz

Quote: Mental

Quote: ChumpChange

So my second-thoughts about exempting the FSP amount from the win amount is in error?
$100 FSP buy-in, $300 cash-out = +$200 session?
link to original post

Your cash buy-in is zero. By cash accounting, this is a +$300 session. If you are playing online, there is no cash involved at any point in the session. Your balance has just increased by $300. Seems like gambling income to me.
link to original post

Your definition of gambling income is incorrect.

In your example the promo credits caused your balance to go up by $300. Now can you cash that out with zero playthrough? If so you are correct.

If not then you haven't had any income yet! I don't know of any online or B&M casino currently where Freeplay can simply be downloaded and then cashed out with zero play. Because it's not cash nor income yet.
link to original post

In the example given by ChumpChange, the FSP was played through generating a win and the win was explicitly cashed out. A TITO voucher is effectively cash, so the $300 of gambling income has been earned and realized.

If I have the same session experience online, the the $300 of gambling income has been earned and realized. Where did the $300 come from if the $100 of FSP has not been played through?

There are several casinos that I know of where there is no play-through requirement for for some or all bonuses. IF YOU MEET THE PROMOTIONAL REQUIREMENTS your balance is credited with a bonus. Would you agree that this bonus is gambling income the second the bonus hits your online credit balance as a withdrawable balance? Or is it never income in your mind?
link to original post

I capitalized the important part of your question.

What are the promotional requirements?

If you are saying something like lose $1000 in wagers and get $300 in Freeplay then it's a rebate and not taxable income.

And yes there have been offers like that. The Revel promotion for example where players could lose up to $100,000 and have it reimbursed in Freeplay. I suppose you would be claiming $100,000 income on that promo the moment you downloaded it onto the slots?

Quote: darkoz

What are the promotional requirements?

If you are saying something like lose $1000 in wagers and get $300 in Freeplay then it's a rebate and not taxable income.

And yes there have been offers like that. The Revel promotion for example where players could lose up to $100,000 and have it reimbursed in Freeplay. I suppose you would be claiming $100,000 income on that promo the moment you downloaded it onto the slots?
link to original post

I won big on that particular promotion, so I never earned a rebate. If I download FSP that represents a rebate, it becomes credits on my machine. Whatever I cash out from that session is clearly gambling income (assuming I never put cash into the machine during that session).

If I were in the wholesale trade and bought an item and then resold it for zero profit, there is no income. Now, if I get a rebate on the original purchase price (because I achieved a certain contractual volume threshold with the seller for the month), then I have to reduce my basis. Now, I have income to report. My cost-of-goods-sold is less than my revenue so I have a business profit. If I get a reduction on future purchase price instead of a rebate, the extra profit will accrue on the next transaction where I use the discount. If I never make another purchase, then there is no effect on my income for a discount that I never used. This is all accounting 101.

Quote: Mental

Quote: darkoz

What are the promotional requirements?

If you are saying something like lose $1000 in wagers and get $300 in Freeplay then it's a rebate and not taxable income.

And yes there have been offers like that. The Revel promotion for example where players could lose up to $100,000 and have it reimbursed in Freeplay. I suppose you would be claiming $100,000 income on that promo the moment you downloaded it onto the slots?
link to original post

I won big on that particular promotion, so I never earned a rebate. If I download FSP that represents a rebate, it becomes credits on my machine. Whatever I cash out from that session is clearly gambling income (assuming I never put cash into the machine during that session).

If I were in the wholesale trade and bought an item and then resold it for zero profit, there is no income. Now, if I get a rebate on the original purchase price (because I achieved a certain contractual volume threshold with the seller for the month), then I have to reduce my basis. Now, I have income to report. My cost-of-goods-sold is less than my revenue so I have a business profit. If I get a reduction on future purchase price instead of a rebate, the extra profit will accrue on the next transaction where I use the discount. If I never make another purchase, then there is no effect on my income for a discount that I never used. This is all accounting 101.
link to original post

Wow you are making the same mistake as Marissa Chien.

Your example of the wholesale trade is you running a business. Of you SELLING items..

Let's say you were in the wholesale business and had a great customer. She made thousands of dollars in purchasing at your store which you tracked using a store shopper club card.

This great customer had enough points earned to get $700 discount on her next shopping day which she used at your store

You consider her as having made $700 profit? Or received a $700 rebate? Are you preparing tax documents for her at end of year?

Gamblers at a casino are not (let's not delve into advantage play issues) "running a business. They are downstream customers the same as airline customers who earn frequent flier miles or shoppers at CVS earning points on every purchase.

They are customers getting a rebate.

You slyly avoided the question in the above post btw. HAD you lost $100,000 at the Revel and then HAD you the opportunity to download $100,000 in Freeplay are you unequivocally stating that you and accounting 101 would consider that $100,000 income the moment the Freeplay credits appeared on your machine and not a rebate from your prior losses?

All of this back and forth, for me, is truly ridiculous. With the exception of a big win $1200+ on a slot, none of these $$ are going to be reported to the IRS. So can someone tell us all how that entity would even know without possible self-reporting?

Consider the posts of MDawg at the beginning of this year. He posted wins of approximately $147k. During that time, I am guessing, he also received maybe $30k+ in comps for RFB. The hypocrisy of the law allows all of this to go unreported to the IRS per a previous post from MDawg (no W-2G's ever) So, Aunt Bea hits a slot jackpot for $1400 and gets reported to the IRS via a W-2G and MDawg slides. Go figure.

Hey, MBJ, if you signed your posts that MJB probably would not have happened.

tuttigym

Doubling down

tuttigym

Frequent flier miles, even when used to purchase a flight, are not considered taxable income. They are a rebate, like free play in a casino (I imagine.)

Quote: gordonm888

Frequent flier miles, even when used to purchase a flight, are not considered taxable income. They are a rebate, like free play in a casino (I imagine.)
link to original post

I've never bothered with one, but I see ads for 100,000 bonus miles if you spend X over Y months. Even those aren't taxable? A similar offer for $500 cash would be a taxable event.

Quote: billryan

Quote: gordonm888

Frequent flier miles, even when used to purchase a flight, are not considered taxable income. They are a rebate, like free play in a casino (I imagine.)
link to original post

I've never bothered with one, but I see ads for 100,000 bonus miles if you spend X over Y months. Even those aren't taxable? A similar offer for $500 cash would be a taxable event.
link to original post

The size of the offer is irrelevant.

It's the purpose. If it's a rebate (a return of funds in some form based on a prior purchase) then it's not income by IRS standards.

If it's a sign-up bonus without any requirements to make a purchase then it's income.

Opening a bank account to get a $50 free deposit would be income.

The IRS own example in their documents is getting a $2000 rebate on the purchase of a car. That's not income.

Size doesn't matter! (Sorry but it's true here)

If opening a bank account to get $50 is taxable, why wouldn't opening a credit card to get 50000 miles be the same thing?

Quote: billryan

If opening a bank account to get $50 is taxable, why wouldn't opening a credit card to get 50000 miles be the same thing?
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It is!

Why am I repeating the same conversation over and over. Not just you Bill everyone.

Is the 50000 miles on a credit card based on your making purchases. If it is it's a rebate.

If it's not it's taxable income.

Is the $50 for opening a bank account only if you make a purchase? If it is it's a rebate. If not it's taxable income.

Rebate vs.prize award

Casino give you new members offers - $50 just for signing up. That's a prize and is taxable income.

Conversely casino ONLY gives new members offers if you play that same day AND it's going to show up a week later based on your play.

That's also a new members offers but based on prior play. It's a rebate and not taxable even though it may be more than $50.

Why is this concept so difficult?

The IRS has had 50+ years to figure this stuff out, and they don't. So I just ordered Tax Help for Gamblers: Poker & Other Casino Games (Fourth Edition) by Jean Scott (Author), Marissa Chien EA (Author), Russell Fox EA.
I'll have to print up a Dark Oz post from last night to put in the book when I get to the appropriate section.
https://wizardofvegas.com/forum/gambling/video-poker/32068-tax-question/36/#post887287
From Amazon description: Tax Help for Gamblers deals with the innumerable nuances and gray areas of gambling and taxes, including changes implemented in the Tax Cuts and Jobs Act of 2017. Hurry, only 3 books left!

Just get a tax guy who understands your particular situation. When the guy I used for years retired, the new guy knew less about my taxes than I did although he was great at most of his job. I don't do my taxes and believe anyone with a complicated form is better off with a pro.

Quote: billryan

Just get a tax guy who understands your particular situation. When the guy I used for years retired, the new guy knew less about my taxes than I did although he was great at most of his job. I don't do my taxes and believe anyone with a complicated form is better off with a pro.
link to original post

Yes good advice.

I went through three accountants who didn't understand anything about gambling and taxes other than claiming jackpots of course.

I finally found one who understands the nuances.

Although licensed for NY he practices in Atlantic City so maybe that's why. The NY accountants I tried didn't get it probably because they don't deal with gamblers that often.

Quote: billryan

If opening a bank account to get $50 is taxable, why wouldn't opening a credit card to get 50000 miles be the same thing?
link to original post

Miles are not dollars.

Quote: Dieter

Quote: billryan

If opening a bank account to get $50 is taxable, why wouldn't opening a credit card to get 50000 miles be the same thing?
link to original post

Miles are not dollars.
link to original post

Shankar vs whomever says miles received for opening a bank account were taxable.

Quote: billryan

Quote: Dieter

Quote: billryan

If opening a bank account to get $50 is taxable, why wouldn't opening a credit card to get 50000 miles be the same thing?
link to original post

Miles are not dollars.
link to original post

Shankar vs whomever says miles received for opening a bank account were taxable.
link to original post

Seriously?

I'm all for pretzelbrained logical justifications (!!), but that's a dang stretch.

Quote: Dieter

Quote: billryan

Quote: Dieter

Quote: billryan

If opening a bank account to get $50 is taxable, why wouldn't opening a credit card to get 50000 miles be the same thing?
link to original post

Miles are not dollars.
link to original post

Shankar vs whomever says miles received for opening a bank account were taxable.
link to original post

Seriously?

I'm all for pretzelbrained logical justifications (!!), but that's a dang stretch.
link to original post

In Shankar the employer was gifting airline miles for work performed. Therefore it was income and not a rebate.

Same rules apply as any items won or earned versus refunded or rebated.

I'm all for pretzelbrained logical justifications (!!), but that's a dang stretch.
link to original post

In Shankar the employer was gifting airline miles for work performed. Therefore it was income and not a rebate.






Shankar vs Commisioneer, IRS ruled that Shankar was responsible for taxes on a flight he took with miles he received for opening a bank account. It's pretty cut and dry. There may be later rulings, but Shankar is pretty clear and doesn't seem to have anything to do to do with an employer giving airline miles.
Type "Shankar, frequent flyer miles" into a search engine and see what pops up

Several years ago, the IRS declared that miles earned on business or official duties are not taxable, but I'm not aware of an official declaration that personal travel miles are tax free.. They simply don't currently enforce it.

Quote: billryan

I'm all for pretzelbrained logical justifications (!!), but that's a dang stretch.
link to original post

In Shankar the employer was gifting airline miles for work performed. Therefore it was income and not a rebate.






Shankar vs Commisioneer, IRS ruled that Shankar was responsible for taxes on a flight he took with miles he received for opening a bank account. It's pretty cut and dry. There may be later rulings, but Shankar is pretty clear and doesn't seem to have anything to do to do with an employer giving airline miles.
Type "Shankar, frequent flyer miles" into a search engine and see what pops up
link to original post

___----------+++++++++++++++formating messed up

You are correct Bill.

I must have confused Shankar with another case. Exasperating because I cannot find that other case now. Maybe my memory is totally wrong.

At any rate Shankar was decided that frequent flier miles were income because they were rewarded for opening bank accounts and therefore fell under prize income and not rebates.

Quote: LoquaciousMoFW

If DarkOz maintains that winnings from any rebate bet are included under the rebate exception, I'm going to need a Revenue Ruling, or private letter ruling, or a tax court case citation before I am convinced that these don't fall under the "Except as otherwise provided" by law, gross income means "all income from whatever source derived," standard; that is, provide the "Except as otherwise provided" part.

EDIT: Removed silly mistake
link to original post

I don't think there has been tax court rulings on Freeplay rebated but Anikeev is perhaps something close enough. Anikeev prevailed for the most part against the IRS.

https://casetext.com/case/anikeev-v-commr

You should read the full decision but the gist is this.

Anikeev and his wife made around $300,000 in two years by earning rewards credits on purchases from an American Express card.

What they did was purchase a few million dollars worth of Visa gift cards with American Express (spread out over two years) They then used the Visa gift cards to purchase money orders.

They then deposited the money orders into their bank account and paid their American Express back

They received rewards dollars for the millions of dollars purchasing Visa gift cards and converted those rewards dollars into cash ($300,000 profit).

They reported none of this in their income taxes citing the rewards dollars as rebates and not income.

Read the tax court decision. It's a lot because there were a number of transaction types but except for a few which the tax court held them liable for the majority of the decision was that the rewards dollars were rebates and not taxable income.

As written, that opinion states the Rewards Dollars are income.

Quote:

"“In conclusion, we hold that the Reward Dollars associated with the Visa gift card purchases were not properly included in income.” Anikeev v. Comm'r, T.C. Memo. 2021-23, 21 (U.S.T.C. Feb. 23, 2021)

Did the court not mean to write that? (Honest question - was there a later correction? I can see them accidentally reversing the order of "properly" and "not" as until the last line the court seemed to be accepting that the Reward Dollars were rebates.)

Quote: LoquaciousMoFW

As written, that opinion states the Rewards Dollars are income.

Quote:

"“In conclusion, we hold that the Reward Dollars associated with the Visa gift card purchases were not properly included in income.” Anikeev v. Comm'r, T.C. Memo. 2021-23, 21 (U.S.T.C. Feb. 23, 2021)

Did the court not mean to write that? (Honest question - was there a later correction? I can see them accidentally reversing the order of "properly" and "not" as until the last line the court seemed to be accepting that the Reward Dollars were rebates.)
link to original post

They ruled on multiple transaction types. As I state above they lost on a few points but won on the bulk due to the type of transaction.

This article might help.
https://www.google.com/amp/s/www.currentfederaltaxdevelopments.com/blog/2021/2/26/taxpayer-escapes-paying-tax-on-nearly-300000-of-credit-card-rewards-achieved-by-buying-gift-cards%3fformat=amp

I understand the multiple transaction types.
The practical takeaway from that case is that sometimes you get lucky, and the IRS screws up, and another person attempting a similar scheme might not fare as well, tax-wise, as the IRS does learn, albeit slowly. The judge said without saying that had the IRS focused on the redemption of the gift cards, rather than the rebates, this case could have gone differently (The court implied that it would have considered the conversion of the gift cards to a cash equivalent a taxable event).

None of this is especially germane to my main point. Somebody (I don't remember who - if I have falsely attributed it to DarkOz, I apologize) in another discussion of taxes took the position that winnings from gambling funded by a rebate should be considered part of the rebate and thus not taxable. I disagree with that assertion, and the case above actually strengthens my conviction, given the extent that the court will examine the circumstances of the transactions to determine "incomeness" and thus taxability.

Let me expand a bit for clarity (I hope):
A person is awarded free play. It is stipulated that the free play is a rebate, and thus not income.
Person makes a wager using only free play (no MGM style making sure you bet your own money), and hits a jackpot of $1,000.

So, is the jackpot considered part of the rebate?
My position is no. The rebate ended when the spin/draw button is pressed, as the person has received the rebate at that time. The effect of the rebate is a free chance at a windfall, just like free tickets to a sweepstakes.

Then again, I am getting older and maybe I imagined this whole "payouts are part of the rebate" thing. In that case, I apologize for creating needless drama, and wasting everyone's time.

Quote: LoquaciousMoFW

Let me expand a bit for clarity (I hope):
A person is awarded free play. It is stipulated that the free play is a rebate, and thus not income.
Person makes a wager using only free play (no MGM style making sure you bet your own money), and hits a jackpot of $1,000.

So, is the jackpot considered part of the rebate?
My position is no. The rebate ended when the spin/draw button is pressed, as the person has received the rebate at that time. The effect of the rebate is a free chance at a windfall, just like free tickets to a sweepstakes.

link to original post

I understand your position as it reflects what Mental is saying as well.

In your scenario the rebate is the ability to enjoy an additional experience (spinning a slot) and not the end results (accession of cash).

The problem with that is it doesn't agree with the IRS statements in their documentation nor even in it's testimony in the above cited case.

The IRS published opinion is that a rebate does not give ascension to wealth but is instead a lowering of cost for services or items rendered such that full paying customers simply pay more of their wealth than those enjoying the rebate.

That terminology is irreconcilable with your and Mental analysis. How could you be enjoying a lower payment through a rebate if it could not be turned into cash? If the rebate is simply the action of an extra service.

Scenario. You take a ride on a ferris wheel. You receive a rebate on the cost of the ticket. Based on your analysis if the rebate is cash back that's income. It's only non-taxable if the rebate was an additional ride on the Ferris wheel. Again that wouldn't lower the cash laid out by the patron.

At any rate you said you would not be inclined to go with what I have been claiming without a tax case involving rebates. I presented one in which the person successfully won and you now reply "sometimes people get lucky" and the tax people can make changes when they want.

If you believe no matter what precedent has occurred the IRS can change their rules then sobeit but CURRENTLY the rules are as I have stated. Cash Rebates are not considered income by the IRS.

Currently i write down each slot machine i play (including slot machine #), begin amount, end amount.

Switching to session recording because it looks easier:
- Date you enter the casino + $ you start with
- Date you left the casino + $ you left with

So if i'm staying at Caesars for a weekend (fri-sun), i enter the dates i checked in/out plus start/end of $ amount
ie: 5/5/23 Caesars $1k, 5/7/23 $1.5k

If i'm doing multiple casinos (Caesars, hard rock, ocean, etc), then doing a daily log would be logical unless i can do this?
3/3/23 Atlantic City $1k, 3/5 $400

The IRS knows that employers try to compensate employees using fringe benefits and thereby avoid paying taxable cash income to the employee. I know that free slot play is not a fringe benefit from an employer. However, it is interesting to see how strict the IRS is with fringe benefits.

https://www.irs.gov/government-entities/federal-state-local-governments/de-minimis-fringe-benefits

Quote: IRS

The IRS has ruled previously in a particular case that items with a value exceeding $100 could not be considered de minimis, even under unusual circumstances.
...
Gift certificates
Cash or cash equivalent items provided by the employer are never excludable from income. An exception applies for occasional meal money or transportation fare to allow an employee to work beyond normal hours. Gift certificates that are redeemable for general merchandise or have a cash equivalent value are not de minimis benefits and are taxable.

Suppose that a casino (where I have never played before) gives me FSP credits at the start of my trip. In the world of oz, this is not income. It is clearly not a rebate, so it must be a gift of a 100% discount on future play. When I play a slot with my own money, I also receive credits when I win. If credits can be considered a gift, then why can't I consider these winnings to be a gift or a rebate on the cost of gambling? Is there a difference whether I receive credits before or after I put my own money at risk? If casino winnings are sometimes not income (accessions to wealth), what specifically is the controlling factor in the determination?

https://en.wikibooks.org/wiki/US_Income_Tax/Income#The_definition_of_income

Quote:

The simple definition of gross income has led to some questioning of what the word "income" actually means within the text of the statute. The authoritative opinion on this issue is the Supreme Court's decision in Commr. v. Glenshaw Glass Co., 348 U.S. 426 (1955), perhaps the most important case in American tax law. Glenshaw Glass established that income is:

any undeniable accession to wealth,
which is clearly realized by the taxpayer,
over which the taxpayer has complete dominion.

The only reason a rebate is not an accession to wealth is that it is effectively a decision by the seller to change the price of the good. This is the seller's prerogative. If your employer needs to take out $1000 of your income for Social Security, can they give you a 80% rebate on this payment and send you a tax-free rebate check for $800?

I am guessing that the principle here is that the IRS cannot determine the proper price of a good based on best business practices. They can determine that the price of a $800 check is $800.

Quote: IRS

A certificate that allows an employee to receive a specific item of personal property that is minimal in value, provided infrequently, and is administratively impractical to account for, may be excludable as a de minimis benefit, depending on facts and circumstances.

Whether the value of a thing is readily discernable, the IRS leans towards counting it as income. The money I win from playing FSP seems to be an undeniable accession to wealth, which is clearly realized by the taxpayer, over which the taxpayer has complete dominion as soon as it is converted from credits to cash. In the old days of coin-operated slot machines, this conversion was immediate.

Quote: Mental

The IRS knows that employers try to compensate employees using fringe benefits and thereby avoid paying taxable cash income to the employee. I know that free slot play is not a fringe benefit from an employer. However, it is interesting to see how strict the IRS is with fringe benefits.

https://www.irs.gov/government-entities/federal-state-local-governments/de-minimis-fringe-benefits

Quote: IRS

The IRS has ruled previously in a particular case that items with a value exceeding $100 could not be considered de minimis, even under unusual circumstances.
...
Gift certificates
Cash or cash equivalent items provided by the employer are never excludable from income. An exception applies for occasional meal money or transportation fare to allow an employee to work beyond normal hours. Gift certificates that are redeemable for general merchandise or have a cash equivalent value are not de minimis benefits and are taxable.

Suppose that a casino (where I have never played before) gives me FSP credits at the start of my trip. In the world of oz, this is not income. It is clearly not a rebate, so it must be a gift of a 100% discount on future play. When I play a slot with my own money, I also receive credits when I win. If credits can be considered a gift, then why can't I consider these winnings to be a gift or a rebate on the cost of gambling? Is there a difference whether I receive credits before or after I put my own money at risk? If casino winnings are sometimes not income (accessions to wealth), what specifically is the controlling factor in the determination?

https://en.wikibooks.org/wiki/US_Income_Tax/Income#The_definition_of_income

Quote:

The simple definition of gross income has led to some questioning of what the word "income" actually means within the text of the statute. The authoritative opinion on this issue is the Supreme Court's decision in Commr. v. Glenshaw Glass Co., 348 U.S. 426 (1955), perhaps the most important case in American tax law. Glenshaw Glass established that income is:

any undeniable accession to wealth,
which is clearly realized by the taxpayer,
over which the taxpayer has complete dominion.

The only reason a rebate is not an accession to wealth is that it is effectively a decision by the seller to change the price of the good. This is the seller's prerogative. If your employer needs to take out $1000 of your income for Social Security, can they give you a 80% rebate on this payment and send you a tax-free rebate check for $800?

I am guessing that the principle here is that the IRS cannot determine the proper price of a good based on best business practices. They can determine that the price of a $800 check is $800.

Quote: IRS

A certificate that allows an employee to receive a specific item of personal property that is minimal in value, provided infrequently, and is administratively impractical to account for, may be excludable as a de minimis benefit, depending on facts and circumstances.

Whether the value of a thing is readily discernable, the IRS leans towards counting it as income. The money I win from playing FSP seems to be an undeniable accession to wealth, which is clearly realized by the taxpayer, over which the taxpayer has complete dominion as soon as it is converted from credits to cash. In the old days of coin-operated slot machines, this conversion was immediate.
link to original post

I'm not certain if it's worth replying to this.

You keep saying in the world of Oz, then completely getting it wrong.

For the fifth or sixth time Freeplay that is not based on prior purchases or play would be considered income as it's not a rebate.

I don't know how to make this any clearer than to repeat it again.

Freeplay that is not based on prior purchases or play would be considered income as it's not a rebate

All your examples of Freeplay that is not a rebate and then saying in your opinion this is income need not be mentioned as I agree with that assessment.

If you are trying to prove me wrong you have to quote me correct.

Otherwise just give up.

Quote: 100xOdds

Currently i write down each slot machine i play (including slot machine #), begin amount, end amount.

Switching to session recording because it looks easier:
- Date you enter the casino + $ you start with
- Date you left the casino + $ you left with
link to original post

You're not "switching to session recording", your CONTINUING session recording, just changing your definition of "session". And your new definition is one that the IRS would likely frown upon, as I explain in my tax article.

Well, if I get to a $50 BJ table and buy-in for $1750 and gamble for a few hundred hands and bet a total of over $250K but end up $30K ahead, I've just increased my income by $30K.
In NYS if I have an Adjusted Gross Income of over $100K, they start limiting how much I can deduct for losses and by the time I get to $500K AGI, they only let you deduct half of your losses. I'm trying to read the newer tax book "Tax Help For Gamblers - 4th Edition" which includes changes from 2018. Some states it doesn't pay to set foot in them because they won't allow you deduct losses, other states don't have taxes at all. NJ lets you net your wins and losses. BTW, when you win outside of your state, do you have to file out of state tax forms when you get home for next April? I guess you do if you want refunds. Hopeless.

Quote: MichaelBluejay

Quote: 100xOdds

Currently i write down each slot machine i play (including slot machine #), begin amount, end amount.

Switching to session recording because it looks easier:
- Date you enter the casino + $ you start with
- Date you left the casino + $ you left with
link to original post

You're not "switching to session recording", your CONTINUING session recording, just changing your definition of "session". And your new definition is one that the IRS would likely frown upon, as I explain in my tax article.
link to original post

Frown? but You give an example of what i'm talking about!

Sample Diary of Sessions
Date Wins Losses Where Game Who With
May 5 $250 Luxor BJ -
May 5 -$200 NY NY slots husband
May 6 $200 Stratosphere slots husband
May 6 -$300 Stratosphere BJ Spanky McBluejay
Total $450 -$500 All of the above on the Las Vegas, NV strip

ahh.. it's a daily session and not weekend session.
ok, i can do daily

Quote: MichaelBluejay

Quote: 100xOdds

Currently i write down each slot machine i play (including slot machine #), begin amount, end amount.

Switching to session recording because it looks easier:
- Date you enter the casino + $ you start with
- Date you left the casino + $ you left with
link to original post

You're not "switching to session recording", your CONTINUING session recording, just changing your definition of "session". And your new definition is one that the IRS would likely frown upon, as I explain in my tax article.
link to original post

1) I can deduct travel expenses?
'Starting in 2018, you can deduct related expenses, like travel to and from the casino.'

So I can deduct airfare to Vegas?
How about cruise ship casino? Can i deduct the cost of the cruise? How about airfare to the cruise?

2) Also, all these deductions are after AGI is calculated?
If i file as a professional gambler, would my deductions be before AGI?

I personally don't bother with all this diary crap. What machine is played etc. Hell it looks more suspicious in my opinion. In all my time in a casino I have never seen anyone doing this

It also is near meaningless when your gambling income is derived through teamwork.

Diary. Employee one enters casino 01/06/23. Plays slot HM101. Leaves for smoke break. Reenters and plays HM104. Switches seat and plays HM107.

Leaves casino brings me cash gets his cut.

Yadda yadda. It's on the honor system? For all they know you walked around a few casinos wrote down their machine numbers and then created a fake diary. You think they will subpoena cell phone records and casino camera footage etc over a misreported tax bill lol.

You guys crack me up.

Quote: darkoz

I personally don't bother with all this diary crap. What machine is played etc. Hell it looks more suspicious in my opinion. In all my time in a casino I have never seen anyone doing this

It also is near meaningless when your gambling income is derived through teamwork.

Diary. Employee one enters casino 01/06/23. Plays slot HM101. Leaves for smoke break. Reenters and plays HM104. Switches seat and plays HM107.

Leaves casino brings me cash gets his cut.

Yadda yadda. It's on the honor system? For all they know you walked around a few casinos wrote down their machine numbers and then created a fake diary. You think they will subpoena cell phone records and casino camera footage etc over a misreported tax bill lol.

You guys crack me up.
link to original post

So you dont file as a professional gambler?

Quote: 100xOdds

Quote: darkoz

I personally don't bother with all this diary crap. What machine is played etc. Hell it looks more suspicious in my opinion. In all my time in a casino I have never seen anyone doing this

It also is near meaningless when your gambling income is derived through teamwork.

Diary. Employee one enters casino 01/06/23. Plays slot HM101. Leaves for smoke break. Reenters and plays HM104. Switches seat and plays HM107.

Leaves casino brings me cash gets his cut.

Yadda yadda. It's on the honor system? For all they know you walked around a few casinos wrote down their machine numbers and then created a fake diary. You think they will subpoena cell phone records and casino camera footage etc over a misreported tax bill lol.

You guys crack me up.
link to original post

So you dont file as a professional gambler?
link to original post

I honestly am not certain.

I have an accountant who has experience with gambling reporting to the IRS. I hand him all my documentation and we go over this and that. He always has questions for me.

And then he tells me I have a return or I owe money (it's been both and even within the same year for example this year I owed one state while getting a return from another which I understand is due to what Chump Change posted above about different states having different rules).

He knows my full and only income is from gambling.

I really don't want the headaches of trying to figure out my taxes on my own.

Seems super-savers may want to reconsider auto-rolling their T-Bills, so here's a video about how to do that yourself. If there are tax consequences, please consult a tax professional she says, lol.

Auto-Roll & The US Debt Ceiling: How To Turn Off Auto-Roll With TreasuryDirect, Fidelity & Schwab - DiamondNestEgg
https://www.youtube.com/watch?v=MebwhEHoFNA

From the comments:
Does the earned interest in T-Bills automatically go into auto roll or is it transferred back to your external bank account?
Only the amount of money needed to purchase the next T-Bill gets auto rolled. Any money above that amount does get transferred back to your external bank account.

I am currently unable to select the auto-roll option for my 17-week T-bills in my Fidelity account. Yesterday, when I attempted to place a request for my 17-week T-bills with the auto-roll feature enabled, I received an error message.
***
Apparently you can get a cash credit for opening an E*Trade Account, I wonder if that's a tax free rebate on money spent. You've got to use a Promo Code to get it though. The lowest rebate is $50 for a $5K deposit, so it's like a Wal-Mart gift card amount.
Of course buying a one month $5,000 T-Bill for $4,990 seems like even chumpier chump change.

I believe that the $50 is taxable, but with the hundreds of thousands of dollars you seem to churn, does it really matter?

So I filed an extension and am finally getting around to doing my taxes.

From IRS Pub 529, I can deduct travel expenses.
'Starting in 2018, you can deduct related expenses, like travel to and from the casino.'

But I can't find a way to separate gambling loses with gambling miles in Schedule A (Itemized deductions):



I'm using HR Block software and you can't type in the grey area.
The grey area in Line 16 is automatically populated by what you enter in worksheet Lines 16a to 16n.
Line 16a is the only place to enter Gambling losses.

So you just add gambling losses with cost of gambling mileage into Line 16a?
Is there a way for me to list separate items?

Quote: 100xOdds

So I filed an extension and am finally getting around to doing my taxes.

From IRS Pub 529, I can deduct travel expenses.
'Starting in 2018, you can deduct related expenses, like travel to and from the casino.'

But I can't find a way to separate gambling loses with gambling miles in Schedule A (Itemized deductions):



I'm using HR Block software and you can't type in the grey area.
The grey area in Line 16 is automatically populated by what you enter in worksheet Lines 16a to 16n.
Line 16a is the only place to enter Gambling losses.

So you just add gambling losses with cost of gambling mileage into Line 16a?
Is there a way for me to list separate items?
link to original post

As a disclaimer. I am not a tax expert, but you could write an addendum citing the IRS Pub 529 along with the specific, relevant text within the publication declare the write-off against the income, and then file the submission.

tuttigym

Quote: darkoz

Quote: 100xOdds

Quote: darkoz

I personally don't bother with all this diary crap. What machine is played etc. Hell it looks more suspicious in my opinion. In all my time in a casino I have never seen anyone doing this

It also is near meaningless when your gambling income is derived through teamwork.

Diary. Employee one enters casino 01/06/23. Plays slot HM101. Leaves for smoke break. Reenters and plays HM104. Switches seat and plays HM107.

Leaves casino brings me cash gets his cut.

Yadda yadda. It's on the honor system? For all they know you walked around a few casinos wrote down their machine numbers and then created a fake diary. You think they will subpoena cell phone records and casino camera footage etc over a misreported tax bill lol.

You guys crack me up.
link to original post

So you dont file as a professional gambler?
link to original post

I honestly am not certain.

I have an accountant who has experience with gambling reporting to the IRS. I hand him all my documentation and we go over this and that. He always has questions for me.

And then he tells me I have a return or I owe money (it's been both and even within the same year for example this year I owed one state while getting a return from another which I understand is due to what Chump Change posted above about different states having different rules).

He knows my full and only income is from gambling.

I really don't want the headaches of trying to figure out my taxes on my own.
link to original post

I file as a professional and my accountant tells me to read the entire return every year. I usually find a few mistakes that get corrected before the final return is submitted.

I believe the signature that you put on your tax return implies that you have read and understood the entire return.

Quote: 100xOdds

(From Michael Bluejay's article: https://easy.vegas/gambling/taxes)
'Starting in 2018, you can deduct related expenses, like travel to and from the casino.'

So I can deduct airfare to Vegas?
How about cruise ship casino? Can i deduct the cost of the cruise? How about airfare to the cruise?
link to original post

So i talked to a tax professional about filing with Sched C (self employed deductions) instead of Sched A (individual taxpayer deductions).

No, i can't deduct mileage going to/from the casino if doing Sched C.
It's commuting to work.
You can't deduct mileage to/from work.

Yes i can deduct airfare, hotel, food, etc costs to Vegas if I'm doing Sched C.
I can also deduct health care premiums and open a sep-IRA if self employed.

Downside of doing Sched C:
15.3% Self employment taxes (Social Security, Medicare)
You have to have lots of deductions to overcome that 15% tax to file as Sched C vs Sched A

Also, IRS scrutinizes business deductions alot more than individual returns.

Quote: 100xOdds

So i talked to a tax professional about filing with Sched C (self employed deductions) instead of Sched A (individual taxpayer deductions).

No, i can't deduct mileage going to/from the casino if doing Sched C.
It's commuting to work.
You can't deduct mileage to/from work.

Yes i can deduct airfare, hotel, food, etc costs to Vegas if I'm doing Sched C.
I can also deduct health care premiums and open a self employed IRA.

Downside of doing Sched C: 15.3% Self employment taxes (Social Security, Medicare)
You have to have lots of deductions to overcome that 15% tax to file as Sched C vs Sched A

This year I screwed myself on taxes. I took a job that is in another state 40% of the time thinking I could deduct my travel costs. It turns out unreimbursed travel expenses for a job are no longer deductible. Basically that means 52 flights and about 100 nights of hotel are not reimbursable for me.

Quote: DRich

Quote: 100xOdds

So i talked to a tax professional about filing with Sched C (self employed deductions) instead of Sched A (individual taxpayer deductions).

No, i can't deduct mileage going to/from the casino if doing Sched C.
It's commuting to work.
You can't deduct mileage to/from work.

Yes i can deduct airfare, hotel, food, etc costs to Vegas if I'm doing Sched C.
I can also deduct health care premiums and open a self employed IRA.

Downside of doing Sched C: 15.3% Self employment taxes (Social Security, Medicare)
You have to have lots of deductions to overcome that 15% tax to file as Sched C vs Sched A

This year I screwed myself on taxes. I took a job that is in another state 40% of the time thinking I could deduct my travel costs. It turns out unreimbursed travel expenses for a job are no longer deductible. Basically that means 52 flights and about 100 nights of hotel are not reimbursable for me.
link to original post

You worked as an employee?

If you were a self employed consultant, i would think the travel expenses would be deductible?