Big Gambling Losses
I've just lost over £65000 through sports betting in the recent built up, i have maybe around £10000 or little over, i recovered over £50000 last year and just this month i ended up losing back 50000 plus another 15000, i dont know how to deal with these losses, i want to get over it but its almost impossible. my head is spinning out of control and im feeling sick every moment of my life now. I dont know if i can tell my parents i've lost this much money because it would be a burden to them! should i be telling my parents about my huge loss? i don't want to commit suicide either because it would burden them also, i need any advice which would help, i want to avoid gambling ever again because its making me sick and been a waste of my life in the past year. After that big first loss your mind is going to be in a permanent state of anxiety and chaos, dwelling on those losses, and this is the most dangerous time for you to be anywhere near any form of gambling. The urge to chase those losses will be stronger than any other urge you will ever face. The gambling voice inside your head will be telling. Gambling losses are exempt from the 2% AGI threshold that applies to some itemized deductions. Gambling losses are exempt from itemized deduction 3%-cutback. Gambling losses are not an adjustment (add-back) in calculating Alternative Minimum Tax (AMT). 8, 2009— - A Nebraska businessman who lost nearly $127 million in a yearlong, Las Vegas gambling binge has accused two Las Vegas casinos of plying him with generous amounts of alcohol and prescription drugs to keep the cash flowing. Gambling Losses May Be Deducted Up to the Amount of Your Winnings. Fortunately, although you must list all your winnings on your tax return, you don't have to pay tax on the full amount. You are allowed to list your annual gambling losses as an itemized deduction on Schedule A of your tax return.
The Tax Court held in a memorandum decision released Monday that taxpayers who were casual gamblers recognized wins or losses when they redeemed their tokens and that they could not net their wins and losses across the year (Shollenberger, TC Memo 2009-306).
In this decision, the court accepted the IRS’ methodology for determining wagering gains and losses, which the Office of Chief Counsel put forth in a legal memorandum in 2008 (AM 2008-011).
The taxpayers in the case were a married couple who gambled occasionally at a casino in the small town of Charles Town, W.Va. On March 29, 2005, the husband hit a $2,000 jackpot at a dollar slot machine. The couple continued gambling and lost $400 from the jackpot; they left the casino that day with $1,600 in winnings. They did not report any gambling income on their tax return for 2005, and the IRS issued a deficiency notice for $2,000 in unreported gambling winnings.
IRC § 165(d) states that “losses from wagering transactions shall be allowed only to the extent of the gains from such transactions” but does not provide a technical definition of the terms “gains” and “losses.” As AM 2008-011 explains, the term “transactions” in section 165(d) could mean every single play in a game of chance or every wager made. That interpretation would require a taxpayer to calculate the gain or loss on every transaction separately and treat every play or wager as a taxable event and also to trace and recompute the basis through all transactions to calculate the result of each play or wager.
Because that method would be “unduly burdensome,” the IRS legal memo allows a casual gambler to recognize a wagering gain or loss at the time he or she redeems tokens.
Big Cat Gambling Losses
At trial, the IRS conceded that under that method, the taxpayers should have reported $1,100 in gambling winnings rather than the $2,000 in the deficiency notice. According to the court, the lesser amount would be calculated as follows: $2,000 in jackpot winnings minus $500 in wagering money originally brought into the casino by the taxpayers minus the $400 lost by the taxpayers after the jackpot that day.
The taxpayers argued that they should be allowed to offset their gambling winnings with $2,264 of other gambling losses that they claimed to have incurred in 2005. Because section 165(d) uses the term “transactions,” the court held that the taxpayers could not net their gains and losses throughout the year. Instead, the court accepted the IRS’ treatment of transactions as occurring when the gambler cashes in his or her tokens at the end of play and held the taxpayers to have $1,100 of unreported gross income for the year.
Huge Gambling Losses
According to the court, to allow the taxpayers to net gains and losses throughout the year would defeat the purpose of IRC § 63, under which losses of casual gamblers are allowable only as itemized deductions.
Big Gambling Losses
For more on IRS legal memorandum AM 2008-011, see Beavers, “IRS Issues Guidance on Determining Wagering Gains and Losses,” 40 The Tax Adviser 129 (February 2009).