Re: Self Employment Income of Gambling Winnings

Posted by webmaster on August 7, 2007, 11:26 pm

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> webmas...@onfirebikinis.com wrote:

>> Recently the IRS notified me that they changed my 2005

>> return. They took my gambling winnings of $60,000, which I

>> had indicated on line 21 (Other Income), and decided to call

>> this self employment income. The result is a new tax bill

>> of $8,000.

>> IRS specifically states in their tax guide that gambling

>> income is to be stated on line 21. Thus, how can they now

>> justify calling this self employment income when I did

>> exactly as they reference in their tax filing instructions?

>> Moderator:

>> File an amended return with the 60K on Schedule C and

>> deduct your expenses related to earning this income. The

>> IRS may reclassify this back to line 21.

> Go a step further, if it is to your benefit, amend the last

> two returns taking gambling losses on a Schedule C. That may

> help put it in perspective for them.

Thanks again for the responses. On line 21 I did indicate
that it was "gambling winnings". The 60,000 total is what I
won from sports betting, mostly football, after subtracting
wins and losses.

I don't see any reference on the letter as being a "CP 2000
letter". The letter starts off: "We've enclosed an
examination report explaining our proposed changes to your
2005 federal income tax return(s). Please review the
examination report and let us know if you agree or disagree
with the proposed changes."

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Geoff on August 8, 2007, 7:08 pm

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>> webmas...@onfirebikinis.com wrote:

>>> Recently the IRS notified me that they changed my 2005

>>> return. They took my gambling winnings of $60,000, which I

>>> had indicated on line 21 (Other Income), and decided to call

>>> this self employment income. The result is a new tax bill

>>> of $8,000.

>>>

>>> IRS specifically states in their tax guide that gambling

>>> income is to be stated on line 21. Thus, how can they now

>>> justify calling this self employment income when I did

>>> exactly as they reference in their tax filing instructions?

>>> Moderator:

>>> File an amended return with the 60K on Schedule C and

>>> deduct your expenses related to earning this income. The

>>> IRS may reclassify this back to line 21.

>> Go a step further, if it is to your benefit, amend the last

>> two returns taking gambling losses on a Schedule C. That may

>> help put it in perspective for them.

> Thanks again for the responses. On line 21 I did indicate

> that it was "gambling winnings". The 60,000 total is what I

> won from sports betting, mostly football, after subtracting

> wins and losses.

> I don't see any reference on the letter as being a "CP 2000

> letter". The letter starts off: "We've enclosed an

> examination report explaining our proposed changes to your

> 2005 federal income tax return(s). Please review the

> examination report and let us know if you agree or disagree

> with the proposed changes."

Then it's pretty simple. Reply that you disagree, and cite
the instructions for putting gambling winnings on line 21.

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>