If you’re new to gambling, you may be surprised to learn that no matter the size of the winnings, whether cash or noncash, they must be reported to the IRS.
Gambler is big winner in Tax Court
By James A. Beavers, CPA, CGMA, J.D., LL.M. Related
Despite inexact substantiation of his losses, the Tax Court held that a taxpayer had lost more than he had won gambling during 2014, and he could take a gambling loss deduction equal to the amount of winnings reported to the IRS on Forms W-2G,
Certain Gambling Winnings, from casinos for the year.
Background
John Coleman is a self-acknowledged compulsive gambler. His preferred form of action is the slot machine, which, unfortunately, generally offers among the worst odds of any type of game in a casino. Coleman testified in Tax Court that over the years his love of playing the slot machines had adversely affected his financial circumstances and his family life. In 2014, it also brought him into conflict with the IRS.