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Taxes and Gambling- Research

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  • Taxes and Gambling- Research

    I'm not sure how many of you know that I am currently a graduate student in accounting. Well, I am currently in my last semester and am taking a class in tax research. One of the requirements of the class is that we must do a short research paper (about 10 pages) on a topic of our choosing. I submitted several topics and the professor really liked my suggestion to do a report on gambling and taxes.

    As many of you know gambling losses are only deductible to the extent of gambling winnings. In other words, you can't claim a deduction for losing money gambling in a year. You can, however, deduct all your losses from all your winnings if you have a good year.

    There's one little exception to all this, however. It deals with professional gamblers. Professional gamblers are allowed to take losses in a given year. If that exception were not allowed, then even the casinos themselves could not take operating losses for tax purposes in a given year. And, as many of you know, the casinos do have to report losses from time to time (many will this year).

    My report is really going to deal with the grey area, however. The grey area is somewhere between Erik Siedel or the local 10/20 professional and the recreational gambler. The recreational gambler is, of course, going to get no help from the IRS. Now, what is the grey area. That's where I think several of you may fit in or may have fit in in the past. The grey area might be someone who thinks of poker as a side business. It might be someone who works a real job and regularly uses poker to supplement his or her income.

    I would like to get some specific situations to take use as examples to support the general theorem that will run throughout the paper. Any help that any of you might have or any questions that any of you might have will be greatly appreciated. In return for your help, I will attempt to answer any of the detailed questions that you might have.

    If any of you have any specific situations that you think would be of interest in this matter, please reply to this post, send me a private message, or send me an email.

    Thanks so much for your help,


  • #2
    Hey diej2002,
    I, for one, would love to see the final version. In the mean time, you might be interested in the following link:

    Good Luck (from another fellow student),
    oil doe


    • #3
      Card Player every issue (I think every one) has a column on taxes and gambling.

      The next to the last issue was on your topic. If you can't find it, contact me through a PM and I will dig up my copy of it.

      Randy Glover


      • #4
        Suggest you contact PSO member "ojude".

        She is a tax accountant living in Las Vegas with a practice specializing in gambling and taxes.


        • #5
          Thanks for the help and the suggestions, both public and private. If you have any continued advice or think of any potential problems, please keep posting.

          Thanks so much,



          • #6
            perhaps the laws have changed since I was involved, but unless they have there is one form of gambling in which losses may be deducted from ordinary income(without limit).

            and to make it even better, such losses may be carried foreward.
            the form of gambling is in the trading of options, puts & calls, and
            certain other financial derrivatives (hope I spelled that right). there
            is however, a limit to the amount of carry foreward which may be applied in any one year. that limit is the same as applied to other capital losses.

            and if you feel that such transactions are not gambling, then I sussest that you try to make a profit trading any of those instruments.


            • #7
              My favorite tax advice: "Let not the government know of thy existence"!


              • #8

                There is certain case law that allows for a professional gambler to take net operating losses and use them in carryforwards and carrybacks, however, I will be the first to agree with you that certain derivatives trading amounts to little more than gambling. Not only that, but I believe that certain investments are actually quite a bit more risky than poker. I would include some of those that you mentioned and also include foreign currencies trading.


                • #9
                  diej, you are right about the pro gamblers tax rulings.

                  But , I do have one question.

                  How did you know that I had bought stock in Dynegy?


                  • #10
                    The real question is,

                    How did you know about my big purchase of JD Uniphase?



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