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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.
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