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Thread: Professional Gambler and the 199A Tax Deduction

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    Professional Gambler and the 199A Tax Deduction

    The new tax law starting in 2018 has a tax deduction called 199A. There is some discussion about this over at BJ21 on green chip. I'm not convinced this deduction applies to a professional gambler. My reasoning is this:

    Qualified trades and businesses include all trades and businesses except the trade or business of performing services as an employee and "specified service" trades or businesses: those involving the performance of services in law, accounting, financial services, and several other enumerated fields, or where the business's principal asset is the reputation or skill of one or more owners or employees.

    Wouldn't a professional gambler come under "the business's principal asset is the reputation or skill of one or more owners or employees."

    Anyway Captain Jack says is applies to professional gamblers if you file as a business and I'm looking for some proof. A passage or something that spells this out. Captain Jack provided this link and I'm overwhelmed by it.
    https://www.irs.gov/pub/irs-drop/reg-107892-18.pdf

    Here are some other sources of info.
    https://www.thetaxadviser.com/issues...deduction.html

    https://www.bdo.com/insights/tax/fed...199a-deduction

    Anyway, I was hoping a tax lawyer, CPA or anyone else with more insight could weigh in and explain this monster.

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    This would be a good question for Russell Fox, who is a CPA and appears on GWAE from time to time. You might want to forward the question to GWAE for his next appearance.

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    Quote Originally Posted by Midwest Player View Post
    Wouldn't a professional gambler come under "the business's principal asset is the reputation or skill of one or more owners or employees."
    I believe that a professional gambler's income will qualify for the 199A deduction. As for the above concern, the proposed regulations define this very narrowly to include only celebrities and people who receive royalties for use of their name, etc. Therefore, since the professional gambler's income is business income, and it is not one of the specified service trade or businesses (SSTBs), it should qualify for the deduction.

    Also note that if the taxpayer's income falls under a threshold amount ($157,500 for single and $315,000 for married taxpayers), then the prohibition on SSTB income does not apply. So even doctors, accountants, etc. can claim the deduction as long as their taxable income falls under these amounts.

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    Quote Originally Posted by Bigdaddy View Post
    I believe that a professional gambler's income will qualify for the 199A deduction. As for the above concern, the proposed regulations define this very narrowly to include only celebrities and people who receive royalties for use of their name, etc. Therefore, since the professional gambler's income is business income, and it is not one of the specified service trade or businesses (SSTBs), it should qualify for the deduction.

    Also note that if the taxpayer's income falls under a threshold amount ($157,500 for single and $315,000 for married taxpayers), then the prohibition on SSTB income does not apply. So even doctors, accountants, etc. can claim the deduction as long as their taxable income falls under these amounts.
    Thanks, after reading more on this I agree with what you said. I wonder how tax software will handle this for 2018. Hopefully the software will do all the figuring. It appears if you are under $157,500 for single or $315,000 for married and have no W-2's it will be pretty straight forward.

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