WEC are you sure about that? I had a guy do mine because there's just so many complications but my forms say "Professional gambler", which of course means I can deduct roulette/blackjack/dumb table game degening from my income
You can never deduct "roulette/blackjack/dumb table game" loses from your 'ordinary income' in any case. You can only deduct those losses from 'other
gambling gains'. If you were declared a professional, you could deduct only your business expenses playing those games, but not from your ordinary income. No matter how you file you can deduct "roulette/blackjack/dumb table game" from any other gambling winnings, including poker, lottery, racetrack,
slots, etc
From IRS Private Letter
...a casual gambler not engaged in the trade or business of gambling would
not have deductible business expenses. The casual gambler’s expenses to engage in
gambling are nondeductible personal expenses under § 262. Like any other taxpayer, a
gambler has the burden of proving that his activities rise to the level of a trade or
business. See Merkin v. Commissioner, T.C. Memo. 2008-146.
http://www.irs.gov/pub/irs-utl/am2008013.pdf
The following formula applies in the examples below.
Schedule C
Wagering gains
- Wagering losses, as limited by § 165(d)
Wagering income
- Business expenses
Business income or loss >>> Form 1040
Business income or loss (Form 1040, line 12)
+ Additional income (Form 1040, lines 7-21)
Total Income (Form 1040, line 22)
Situation 1. A is a professional gambler engaged in the trade or business of
playing poker. Gambling is A’s sole occupation; A is not employed and has no other
income. Throughout the year, A traveled to various
casinos and other venues where
gambling is legal to participate in poker tournaments. At the end of the year, A had total
wagering gains of $100,000, total wagering losses of $75,000, and incurred $15,000 in
business expenses for transportation, meals and lodging.
A must report the $100,000 of wagering gains as gross receipts. Under § 165(d),
A may subtract $75,000 of wagering losses from the $100,000 of gross receipts,
resulting in $25,000 of wagering income. Under § 162(a)(2), A may then deduct
$15,000 in business expenses from the $25,000 of wagering income, resulting in
$10,000 of business income. POSTN-139898-08 9
Situation 2. Assume the same facts as Situation 1, except that B also had
$10,000 of (taxable) investment income. B must report the $100,000 of wagering gains
as gross receipts. Under § 165(d), B may subtract $75,000 of wagering losses from the
$100,000 of gross receipts, resulting in $25,000 of wagering income. Under
§ 162(a)(2), B may then deduct $15,000 in business expenses from the $25,000 of
wagering income, resulting in $10,000 of business income. B also must report the
$10,000 of investment income as gross income under § 61. B therefore has $20,000 of
total income ($10,000 business income + $10,000 investment income).
Situation 3. C is a professional gambler engaged in the trade or business of
playing poker. Gambling is C’s sole occupation; C is not employed and has no other
income. Throughout the year, C traveled to various casinos and other venues where
gambling is legal to participate in poker tournaments. At the end of the year, C had total
wagering gains of $75,000, total wagering losses of $100,000, and incurred $15,000 in
business expenses for transportation, meals and lodging.
C must report the $75,000 of wagering gains as gross receipts. Under § 165(d),
C may deduct wagering losses to the extent of wagering gains. Therefore, C may
subtract only $75,000 of his $100,000 of wagering losses from gross receipts,
completely offsetting his $75,000 of gross receipts. C may not carry over the excess
$25,000 of (unused) wagering losses to offset wagering gains or other (non-wagering)
income in another taxable year. Under § 162(a)(2), C may then deduct the $15,000
business expense without regard to § 165(d), resulting in a net operating loss of
$15,000. C may carry that $15,000 net operating loss over or back to another year
under § 172(b). POSTN-139898-08 10
Situation 4. Assume the same facts as Situation 3, except that D also had
$10,000 of (taxable) investment income. D must report the $75,000 of wagering gains
as gross receipts. Under § 165(d), D may deduct wagering losses to the extent of
wagering gains. Therefore, D may subtract only $75,000 of his $100,000 of wagering
losses from gross receipts, completely offsetting his $75,000 of gross receipts. D may
not carry over the excess $25,000 of (unused) wagering losses to offset wagering gains
or other (non-wagering) income in another taxable year. Under § 162(a)(2), D may then
deduct the $15,000 business expense without regard to § 165(d), resulting in a
business loss of $15,000 from gambling. D must also report the $10,000 of investment
income as gross income under § 61, resulting is a net operating loss of $5,000 ($10,000
investment income - $15,000 business loss). D may carry this $5,000 net operating
loss over or back to another year under § 172(b).