According to the IRS, a professional player is classified as a trade or business. To prove that you are a professional player, you must prove that there is a profit motive involved. You can deduct gambling losses only if you itemize your deductions on Schedule A (Form 1040) and keep a record of your gains and losses. The amount of losses you deduct cannot exceed the amount of gambling income you reported on your return.
Claim your gambling losses up to the amount of winnings, such as Other Itemized Deductions. Professional players are treated differently from amateur players for tax purposes because a professional player is considered to be engaged in the trading or gambling business. The professional player reports the winnings and losses of gambling for federal purposes in Schedule C, Business Profit or Loss. To calculate his trading income, the professional player can cancel all betting activity, but he cannot report a total betting loss.
In addition, the taxpayer can deduct ordinary and necessary business expenses (expenses other than gambling) incurred in connection with the business. Commissioner (200), Castagnetta was a part-time truck driver and claimed in his taxes to be a professional player. Remember, casual players can only claim losses as deductions itemized on Schedule A up to the amount of their winnings. For additional information on withholding gambling winnings, see Publication 515, Withholding Tax on Non-Resident Aliens and Foreign Entities.
Revenue from gambling doesn't have to be your only source of support, but a couple of trips a year to Las Vegas probably won't convince you. Therefore, professional players were able to generate an NOL from gaming activities until the TCJA modified Sec. If the beneficiary of the staking agreements is also a professional player, you may be able to claim that the payments are effectively connected to your EU CPAs whose customers have gambling revenues and losses must understand the specific manner in which those customers engage in such activities and, in certain circumstances, whether have additional reporting and retention requirements. In addition, the person may deduct any ordinary and necessary business expenses, which may include travel and food expenses, legal and accounting fees, and subscriptions to magazines or gambling services.
Whether a player is an amateur or a professional for tax purposes is based on facts and circumstances. The TCJA, however, put an end to the ability of professional players to deduct non-betting trading expenses above net betting revenues. They accepted that she did her gambling in a businesslike way, just as she did with her trucking business; she had been betting for 10 years and considered herself an expert. If you receive a Form W-2G along with your gambling winnings, don't forget that the IRS will also receive a copy of the form.
Gambling winnings are fully taxable and individuals must report them as income on their tax returns, regardless of the size of the winnings. As a result, the IRS will generally also accept other evidence of in-game winnings and losses, such as casino impressions. Comps are winnings from betting transactions because the relationship between the comps and the player's bets is close, direct, evident and strong (Libutti, T.