Quote: fremont4everWhy would they do that? Borrowed money is never taxable. If that money is used to make real money, then THAT is taxable
I actually meant the deductibility of the interest on such things as home equity loans. The rule set on that is another quagmire, and I won't get into it because it's OT, but as I mentioned, I'm just surprised that the IRS never got into attacking people over it.
Quote: SOOPOOVery interesting. As we all know there really is no such thing as a 'session'. Each bet is an individual event. You make 1000 $100 pai gow bets.... You are lucky and win 400, push 300, and lose 300.... So you won $380,000, and lost $300,000.... You do this 10 times ayear... Next time you win $320,000, but lose $360,000... at the end of the year you won 3.6MILLION, and lost 3.5 MILLION.... Ya think you'll trigger an audit? I agree with Bob here...
If you're netting $100,000 a year, then you should be considering it a business instead of "gambling income", and take all the legally available deductions you can for having a business. Of course, I used to recommend this to any person with a "hobby" that netted more than $10k a year.
Quote: konceptumIf you're netting $100,000 a year, then you should be considering it a business instead of "gambling income", and take all the legally available deductions you can for having a business. Of course, I used to recommend this to any person with a "hobby" that netted more than $10k a year.
This brings up another good point. The IRS article I linked in my original post said that those rules applied to "casual gamblers." What's the line for becoming a "professional gambler?" I'm poking around the tubes but nothing obvious yet.
Thanks everyone for the intelligent and amusing discussions! I really like this board.
Quote: AcesAndEightsWhat's the line for becoming a "professional gambler?" .
It means you have to file quarterly, and get 'probed'
often to see if your lifestyle matches your claimed
income. This is to be avoided unless absolutely
necessary.
Any truth to this assertion? I cannot find any information that supports this claim. I had over $6,000 in W2-G wins and not sure if I have enough losing horse racing tickets to match my wins. I have at least $3k or $4k worth of losing tickets, but thought slot losses would easily cover the rest should I ever have to prove this to the IRS.
Quote: SONBP2My accountant told me that if I had ... horse racing wins, I couldn't use ... slot and table games as losses. ...Any truth to this assertion?
If you maintain adequate records, you are correct and your accountant is not. Gambling losses can be claimed as deductions up to the amount of gambling wins.
Another "gotcha", and why I might significantly cut back in gambling the year before my daughter heads off to college: gambling wins, as others have pointed out, get added to your income, which gets all totaled up into your Adjusted Gross Income (AGI). The AGI figure is used for, among other things, the amount of family income on financial aid forms.
Gamblng losses, because they're deductions, get subtracted from AGI later in the tax form. Unless things have changed in the last several years, this deduction doesn't show up on the financial aid forms. I'm a really low roller, but if I've cumulatively had $8000 in wins and $8500 in losses, it'll skew the financial aid forms and not paint a true picture of my income.
http://www.mass.gov/dor/individuals/filing-and-payment-information/guide-to-personal-income-tax/massachusetts-income/gambling-and-lottery.html
"For Massachusetts purposes, losses up to winnings are not deductible even if they may be claimed as an itemized deduction on U.S. Form 1040, Schedule A. (Exception -see Gambling Activities that Constitute a Trade or Business."
Quote: travislThat's crazy. If I visited you in Massachusetts, and we agreed to flip a coin 100 times, with the loser paying the winner $10 each time, the way I'm reading this, we'd both expect to break even on the flips, but would each owe Massachusetts taxes on $500 of winnings.
Right. Michigan is the same way. My understanding is that many other states do it this way too.