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Beethoven9th
Beethoven9th
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January 8th, 2014 at 12:05:00 AM permalink
I know we have a handful of AP's on this forum, and I'm curious, have any of the AP's here ever been audited for a year where their sole/primary source of income came from gambling?

I've always been under the impression that the IRS is more likely to audit professional gamblers than those with regular 9 to 5 jobs, but I have nothing to back up this assumption.

Thanks in advance.
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djatc
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January 8th, 2014 at 12:41:49 AM permalink
Quote: Beethoven9th

I know we have a handful of AP's on this forum, and I'm curious, have any of the AP's here ever been audited for a year where their sole/primary source of income came from gambling?

I've always been under the impression that the IRS is more likely to audit professional gamblers than those with regular 9 to 5 jobs, but I have nothing to back up this assumption.

Thanks in advance.



I'm afraid to file this year since I have all types of W2-Gs. First year it's gonna get hairy with all types of wins and losses.
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AlanMendelson
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January 8th, 2014 at 12:50:58 AM permalink
About 20 years ago I was called in for a TCMP audit (Taxpayer Compliance Measurement Audit) -- the mother of all audits -- when I was employed, had a regular paycheck with payroll deductions, and had not yet started playing in casinos.

My company was audited about 9 years ago and as part of the company audit my partners and I had to present our personal tax returns. I played in casinos at the time and had lots of W2Gs, but no mention was made of the W2Gs or any gambling wins or deductions.

Both audits revealed no changes to my tax returns or any problems whatsoever.

My accountant once told me that the IRS doesn't audit gamblers unless something really unusual shows, because the IRS believes no one really wins gambling in casinos.
Beethoven9th
Beethoven9th
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January 8th, 2014 at 4:55:57 AM permalink
Quote: djatc

I'm afraid to file this year since I have all types of W2-Gs. First year it's gonna get hairy with all types of wins and losses.


But it's all good if you're up for the year. *thumbs up*
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Beethoven9th
Beethoven9th
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January 8th, 2014 at 4:57:58 AM permalink
Quote: AlanMendelson

About 20 years ago I was called in for a TCMP audit (Taxpayer Compliance Measurement Audit) -- the mother of all audits -- when I was employed, had a regular paycheck with payroll deductions, and had not yet started playing in casinos.

My company was audited about 9 years ago and as part of the company audit my partners and I had to present our personal tax returns. I played in casinos at the time and had lots of W2Gs, but no mention was made of the W2Gs or any gambling wins or deductions.

Both audits revealed no changes to my tax returns or any problems whatsoever.

Wow, it must have been a nightmare going through that song & dance though...


Quote: AlanMendelson

My accountant once told me that the IRS doesn't audit gamblers unless something really unusual shows, because the IRS believes no one really wins gambling in casinos.

Thanks for the info, that's good to hear. I don't know why I thought the exact opposite.
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odiousgambit
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January 8th, 2014 at 7:01:58 AM permalink
Quote: AlanMendelson

About 20 years ago I was called in for a TCMP audit (Taxpayer Compliance Measurement Audit) -- the mother of all audits -- when I was employed, had a regular paycheck with payroll deductions, and had not yet started playing in casinos.



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gpac1377
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January 8th, 2014 at 7:43:13 AM permalink
Quote: Beethoven9th

I've always been under the impression that the IRS is more likely to audit professional gamblers than those with regular 9 to 5 jobs, but I have nothing to back up this assumption.


Be warned that I don't have any direct experience, but it seems likely that business owners in general would tend to attract more audits.

If you classify yourself as a recreational gambler, your gross winnings are claimed as other income, and the offsetting losses are claimed as an itemized deduction. Itemized deductions tend to attract IRS attention.

If you classify yourself as a pro, your income and losses are claimed on schedule C (sole proprietorship). Schedule C will be scrutinized for the same reason: because the IRS wants to ensure that your "deductions" are legit. But beyond the issue of gambling losses, schedule C opens up the possibility of deducting expenses, such as travel and lodging costs. Business expenses receive particular IRS scrutiny.
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EvenBob
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January 8th, 2014 at 12:06:22 PM permalink
Quote: AlanMendelson



My accountant once told me that the IRS doesn't audit gamblers unless something really unusual shows, because the IRS believes no one really wins gambling in casinos.



I heard the same thing from a CPA. It's not that
they don't win, they don't win enough to make
it worth an IRS audit. He told me the IRS is
a business, they need to audit people they
believe will give them the most bang for their
buck. They aren't going to waste their time on
a small fry unless they have all the evidence
beforehand and can nail him quick. Like an
ex wife has sent them everything she's been saving
in proof for the last 5 years.
"It's not called gambling if the math is on your side."
DRich
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January 8th, 2014 at 12:20:23 PM permalink
Although I am not a pro, in 2003 I played very heavily and I did get a letter audit from the IRS. It was completely my fault because I misplaced about $30k worth of W2G's and didn't include them on my taxes. The process was very formal but I was able to handle everything myself with letters. It took me about nine months of back and forth and we finally came to an amicable resolution. Thankfully it wasn't a full audit, I would have had a lot harder time justifying things.
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Beethoven9th
Beethoven9th
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January 8th, 2014 at 12:22:16 PM permalink
Quote: Beethoven9th

Quote: AlanMendelson

My accountant once told me that the IRS doesn't audit gamblers unless something really unusual shows, because the IRS believes no one really wins gambling in casinos.

Thanks for the info, that's good to hear. I don't know why I thought the exact opposite.


Then again, come to think of it, I wonder if this still holds true for AP's whose sole source of income comes from gambling? It seems like there would be a difference, but again, I have nothing to back that opinion up. Still curious.
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