Attention, Signers for Slot Winnings over $1,200

[Aslan]

A fellow I know signed W2-G's for $15,000 in slot winnings one year. A few years later the IRS told him he owes taxes on another $35,000. Either the casino provided the information on the player's other winnings (he played rated), or the IRS asked the casino to provide a profile on him and discovered he won another $35,000 from table games. His win/loss statement shows $50,000 in overall winnings and breaks it down between slots and table games. His only hope is to find loss offsets from other casinos for that time period.

[RWM]

Gamblers are supposed to keep a diary of their wins and losses. My understanding is if the diary is different than the casinos total the diary has precedence. Casinos records are wrong more often than not.

[BJNewbeeNoMore]

Aslan,

Doesn't the IRS say where the other amount is from (35K)? Could it be from other W2Gs that he forgot to file? This has happened to my friend before and when the IRS said he owes taxes for x$ more, they sent copies of the W2Gs he forgot to file.

[Aslan]

Aslan,

Doesn't the IRS say where the other amount is from (35K)? Could it be from other W2Gs that he forgot to file? This has happened to my friend before and when the IRS said he owes taxes for x$ more, they sent copies of the W2Gs he forgot to file.

No, it was not W2-G's he forgot to file. IRS made it clear that it was other winnings at the same casino, but not requiring W2-G's. Somehow, the IRS had access to the casino's records, either by request or by casino initiative. Maybe the IRS was seeking to offset my friend's winnings with his casino losses, since nearly all gamblers have overall losses, but if that was the case, it backfired. My friend is not an advantage player, but he did have significant wins that year.

[RS]

I don't mean to be rude Aslan, but what's the point here?

Hopefully he kept a session journa. Why didn't he report the table games winnings? Did he report other slot sessions? I don't know about him or anyone else, but there's no way in hell I'll be filing W2G's without including other sessions from table/slot/VP. Does the IRS just think, "Hey this guy has $15k+ in w2g's, I'm sure he's never played a table game or even had a winning/losing session at the slots that didn't include a w2g." ??

[Aslan]

I don't mean to be rude Aslan, but what's the point here?

Hopefully he kept a session journa. Why didn't he report the table games winnings? Did he report other slot sessions? I don't know about him or anyone else, but there's no way in hell I'll be filing W2G's without including other sessions from table/slot/VP. Does the IRS just think, "Hey this guy has $15k+ in w2g's, I'm sure he's never played a table game or even had a winning/losing session at the slots that didn't include a w2g." ??

No, a non-advantage player, he is not very gambling wise and never keeps a journal. He figures that the only winnings the IRS knows about are those that he signs for, such as, slot machine jackpots exceeding $1,200.

The point is, many APs believe their winnings are invisible to the IRS except for those that they sign for, such as jackpots over $1,200. Even the win/loss statement issued upon request by the casino is marked, "Not for tax purposes." I personally did not know these statements were available to the IRS, even though I keep a journal and pay on all my winnings.


Do you think the average non-AP keeps a journal? No, their expectation is to lose overall, at table games and especially at slots, so why go to the trouble of keeping a journal. But I posted this anecdote for any AP who may think the IRS does not go into their casino records.

By the way, do you pay taxes on the winnings you rat-hole and which do not go on your win/loss statement? Don't answer that. The point is again, people, APs and non-APs alike, may be guilty of not paying taxes on winnings they do not believe are known to the IRS. Many APs, especially those who do not play slots and therefore do not have "signers", may believe they do not really need to keep a journal, especially since they never have wins over $10,000 requiring an IRS report to be filed. But even the small gambler is at risk-- a good thing to know for those who do not already know it as yourself.

[moo321]

-Generally, taxpayers required to keep records to substantiate deduction: Treasury Regulation § 1.6001–1

-Mayer v. Commissioner (2002): Unsigned statement on casino letterhead was insufficient to prove taxpayer's claimed gambling losses; statement contained no explanation of certain important terms and expressly claimed to be only an estimate

-Norgaard v. Comissioner (1991): Gambler using "bankroll method" and who presented a bunch of betting tickets to substantiate loss had his deduction overturned.

-Stein v. Commissioner (1963): "Win/loss" scribbled on napkins at the end of each day and then entered into a notebook was not reliable evidence to uphold loss deduction

[moo321]

tldr version: You need to keep a written diary of your win/loss and games played at each casino, each day. I would strongly recommend also keeping a "buy-in/cash-out" section.

[Goodboy]

Very informative moo321.

Even though I don't live or play in the US, can't resist the urge to ask for the sake of learning: When you say written diary:

- You mean written as in paper and pencil? Written in some specific format as a Ledger or accountant would use?

- Excel spreadsheets with all the information required for each day and session would be considered ok? If so, what makes the Excel spreadsheet different from the case you mentioned from 1963 where the "napkin notes" were transferred later to a notebook? (assume a paper notebook, because of the date). After all the Excel spreadsheets could have been filled with "napkin notes" taken on the spot.


Enviado desde mi MK16a usando Tapatalk 2

[Aslan]

-Generally, taxpayers required to keep records to substantiate deduction: Treasury Regulation § 1.6001–1

-Mayer v. Commissioner (2002): Unsigned statement on casino letterhead was insufficient to prove taxpayer's claimed gambling losses; statement contained no explanation of certain important terms and expressly claimed to be only an estimate

-Norgaard v. Comissioner (1991): Gambler using "bankroll method" and who presented a bunch of betting tickets to substantiate loss had his deduction overturned.

-Stein v. Commissioner (1963): "Win/loss" scribbled on napkins at the end of each day and then entered into a notebook was not reliable evidence to uphold loss deduction

I get your meaning, Moo, but there is no tax "deduction" for gambling losses in the ordinary tax sense, but only in the sense of an "offset" to gambling winnings. There is no tax deduction for gambling losses alone. There are, however, allowable deductions for other kinds of losses, such as, casualty, disaster, theft, and business losses.

[Aslan]

Very informative moo321.

Even though I don't live or play in the US, can't resist the urge to ask for the sake of learning: When you say written diary:

- You mean written as in paper and pencil? Written in some specific format as a Ledger or accountant would use?

- Excel spreadsheets with all the information required for each day and session would be considered ok? If so, what makes the Excel spreadsheet different from the case you mentioned from 1963 where the "napkin notes" were transferred later to a notebook? (assume a paper notebook, because of the date). After all the Excel spreadsheets could have been filled with "napkin notes" taken on the spot.


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Here's what the IRS has to say:

Tt is important to keep an accurate diary or similar record of your gambling winnings and losses. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses. Refer to Publication 529, Miscellaneous Deductions, for more information.

[moo321]

Very informative moo321.

Even though I don't live or play in the US, can't resist the urge to ask for the sake of learning: When you say written diary:

- You mean written as in paper and pencil? Written in some specific format as a Ledger or accountant would use?

- Excel spreadsheets with all the information required for each day and session would be considered ok? If so, what makes the Excel spreadsheet different from the case you mentioned from 1963 where the "napkin notes" were transferred later to a notebook? (assume a paper notebook, because of the date). After all the Excel spreadsheets could have been filled with "napkin notes" taken on the spot.


Enviado desde mi MK16a usando Tapatalk 2

Excel is fine. A lot of these regs/cases were before spreadsheets became popular/existed.

However, you need to include each time you go into a casino! So if you go to 3 different casinos, you need a win/loss for each time you go to that casino.

Shollenberger v. Commissioner (2009): "For example, a casual gambler who enters a casino with $100 and redeems his or her tokens for $300 after playing the slot machines has a wagering gain of $200 ($300–$100). This is true even though the taxpayer may have had $1,000 in winning spins and $700 in losing spins during the course of play"

[Aslan]

-Generally, taxpayers required to keep records to substantiate deduction: Treasury Regulation § 1.6001–1

-Mayer v. Commissioner (2002): Unsigned statement on casino letterhead was insufficient to prove taxpayer's claimed gambling losses; statement contained no explanation of certain important terms and expressly claimed to be only an estimate

-Norgaard v. Comissioner (1991): Gambler using "bankroll method" and who presented a bunch of betting tickets to substantiate loss had his deduction overturned.

-Stein v. Commissioner (1963): "Win/loss" scribbled on napkins at the end of each day and then entered into a notebook was not reliable evidence to uphold loss deduction

Other than the moral consideration, do you advocate the keeping of a gambling journal for those who play unrated? What do you consider their risk or liability? On the moral side of the question, a person not keeping a journal can play out of a bankroll and know at the end of each year exactly how much he won or lost overall, and file his taxes accordingly. The IRS will not reject a payment of taxes on undocumented winnings.