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Posted by Seth on August 5, 2007, 4:16 pm
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> 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.
If those expenses were purchasing a lottery ticket, that
isn't going to help (but it also is clear that it's not
self-employment income).
If he went to Nevada every other week and counted blackjack,
the IRS has a strong case. But you're right, of course, his
travel expenses, hotel rooms (unless comped), half his
meals, etc. are deductible by his business.
Seth
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Posted by webmaster on August 5, 2007, 4:17 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.
Thanks for the reply. Unfortunately, I don't have much in
the way of expenses. The only thing I can think of would be
using my house as an office. Other than that, I can't think
of any expenses.
<< ------------------------------------------------------- >>
<< 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. >>
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Posted by Stuart Bronstein on August 6, 2007, 10:32 pm
Please log in for more thread options webmaster@onfirebikinis.com wrote:
> 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.
>>
>> 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.
> Thanks for the reply. Unfortunately, I don't have much in
> the way of expenses. The only thing I can think of would be
> using my house as an office. Other than that, I can't think
> of any expenses.
Do you just gamble on line, or do you travel somewhere to do
it? If you travel, those expenses are deductible. If you
use a home office, you can write off part of your rent or
depreciate part of your house, and deduct a part of your
utilities.
Stu
<< ------------------------------------------------------- >>
<< 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. >>
<< ------------------------------------------------------- >>
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Posted by Dick Adams on August 5, 2007, 4:17 pm
Please log in for more thread options webmaster@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?
After thinking about this some more, the questions are how
did you win $ 60,000 and how much earned income did you have
from your stated oddupation?
The IRS has a fairly sucessful history of fighting claims
of "Professional Gambler" as an occupation. There are no
professional Lottery, Keno, Slots, or Craps players. But
there are professional Blackjack and Poker players. In the
latter two, you would have expenses to get to and stay at
casinos - unless you were playing at home on the Internet
or even worse running the game at your home.
Without a full understanding of the facts, I suspect you're
going to need a tax professional with audit experience!
Adams' Rule #1: NEVER represent yourself before the IRS.
Dick
<< ------------------------------------------------------- >>
<< 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. >>
<< ------------------------------------------------------- >>
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Posted by rlsusenet@NOSPAMPUHLEEZschnapp on August 5, 2007, 4:17 pm
Please log in for more thread options webmaster@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.
...or not. If it's self-employment income, and he didn't
max out on his FICA through other employment income, the IRS
is probably going to come out ahead with his self-employment
taxes (which is presumably the source of that $8k tax bill).
That is, unless the poster spent an awful lot of money on
gambling expenses, such as airfares. Entertainment expenses
probably wouldn't be allowed as a biz expense.
<< ------------------------------------------------------- >>
<< 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. >>
<< ------------------------------------------------------- >>
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