gambling winnings

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- bh2os62
  
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posted
8 years ago

Thu, Dec 10, 2015 4:07 PM

It used to be on slot machine winnings that each time you won $1200 or more on a single pull a W2G would be issued by casino. Any losses would have to be deducted on Sched. A, thus not a net win on the W2G.

In JK Lasser's 2016 edition p.283, it says that in player tracked machines, the net amount is now the key figure so one doesn't have to receive a W2G if net amount is less than $1200,

This is a radical change to procedures. Can anyone verify this? Or are there other gambling specific tax issues type of forums to check with.

tks all

bill w.

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- Arthur Rubin
  
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posted
8 years ago

Thu, Dec 10, 2015 6:29 PM

Well, casinos may still report under the old system, and you may still file using the "new" system (reporting net session winnings as miscellaneous income and net session losses as additional itemized deductions up to net winnings on Schedule A) (if you keep a contemporaneous log). There were a couple of recent court cases (well, 2008) which specify that you may net within a gambling session before reporting wins and losses. It's nice to know the IRS has finally produced regulations which conform to the law. However, the last printed instructions for form W-2G specifically prohibit netting on slot machines, so that the gross winnings on a pull must be reported.

In other words, JK Lasser may be correct as to the law, but the IRS instructions disagree.

- Arthur L. Rubin CRTP, AFSP in Brea, CA

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- Alan
  
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posted
8 years ago

Thu, Dec 10, 2015 11:32 PM

The IRS issued a Proposed Revenue Provision (Safe Harbor Method for Determining a Wagering Gain or Loss from Slot Machine Play) in Notice

2015-21 seeking commentary on the various elements of the provision. The final provision has not been released and therefore the safe harbor does not exist. This does not mean that you can not use the session method for slot wins regardless of the W-2G issued. Rather than go into details, the following link has the history of this issue including citations and the case that allowed a couple to use the net session wins rather then the amount on the W-2G.

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OR

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- bh2os62
  
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posted
8 years ago

Sat, Dec 12, 2015 6:14 AM

tks for detailed response, I am going to followup with some casino industry folks and JK Lasser to see what is going on here. If this is implemented, casinos will have a mess to deal with even with high priced software. This might be a compromise to reporting the $600 wins, who knows, eh?

bw

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- D. Stussy
  
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posted
8 years ago

Mon, Dec 14, 2015 5:48 AM

tks for detailed response, I am going to followup with some casino industry folks and JK Lasser to see what is going on here. If this is implemented, casinos will have a mess to deal with even with high priced software. This might be a compromise to reporting the $600 wins, who knows, eh? ========== I'm surprised that this is even an issue in this day.

I can remember a case I had about 24 years ago (when I still worked at the IRS) where the taxpayer had 500+ W-2Gs, yet was a "weekender." (As I was in California, this was a person who would go to Las Vegas on the weekends). Now that Casinos do tracking if the gambler has one of their cards, the IRS would much rather prefer the tracking report and its net session reporting than to have to audit each win and loss for the year for those with a gambling addiction.

Note that the procedures you all are citing only apply to those gamblers who have tracking logs. The old-fashioned way has to be applied to those who don't (like state lottery players).