What Is A Professional Gambler

1. What Does A Professional Gambler Do
2. Gambling As A Profession
3. What Is Considered A Professional Gambler
4. Professional Gambling
5. What Is A Professional Gambler
6. Professional Sports Bettors

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An individual professional gambler's expenses relating to his trade or business are usually fully deductible under IRS Code §162 as 'above the line' items. Thus, unlike recreational gambler, most of an individual professional gambler's expenses (within reason) are deducted on Schedule C rather than as itemized expenses on Schedule A. 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. Professional gamblers are treated differently from amateur gamblers for tax purposes because a professional gambler is viewed as engaged in the trade or business of gambling. The professional gambler reports gambling winnings and losses for federal purposes on Schedule C, Profit or Loss From Business. To compute his or her business income, the professional gambler may net all wagering. Becoming a Professional Gambler – Choose Your Discipline We like to say that gambling is a lot like martial arts. You can be a black belt in Muay Thai, and a complete beginner at Jiu-Jitsu. The same goes for gambling – you can be a semi-pro level poker player, but not have the first clue about trading the financial markets for a profit. Bill Benter – Maths Genius Supreme. Bill is a perfect example of how to make money gambling.

gam·bling

(găm′blĭng)n.

Gambling

Noun

1.

gambling - the act of playing for stakes in the hope of winning (including the payment of a price for a chance to win a prize); 'his gambling cost him a fortune'; 'there was heavy play at the blackjack table' gaming, play diversion, recreation - an activity that diverts or amuses or stimulates; 'scuba diving is provided as a diversion for tourists'; 'for recreation he wrote poetry and solved crossword puzzles'; 'drug abuse is often regarded as a form of recreation' sporting life - active interest in gambling on sports events wager, bet - the act of gambling; 'he did it on a bet' gambling game, game of chance - a game that involves gambling vice - a specific form of evildoing; 'vice offends the moral standards of the community' throw - casting an object in order to determine an outcome randomly; 'he risked his fortune on a throw of the dice'

gambling

gambling

[ˈgæmblɪŋ]

gambling

[ˈgæmblɪŋ]n → jeum
He likes gambling → Il aime le jeu.gambling man n (= gambler) → joueurm
Are you a gambling man, Mr Graham? → Êtes-vous joueur, M. Graham?

gambling

gamble

(ˈgӕmbl) verb nounˈgambler nounˈgambling nountake a gamble

gambling

→ مُقَامَرَة hazardní hra

What Does A Professional Gambler Do

hasardspilGlücksspielτζόγοςjuego uhkapelijeu kockanjegioco d'azzardo ギャンブル 도박

Gambling As A Profession

gokkengamblinghazardjogo de azarазартная игра hasardspel การพนันkumar liên quan đến đánh bạc赌博

gambling

n juego (apostando); — addiction (fam) adicción f al juego
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By Alistair M. Nevius

Professional gamblers are treated differently from amateur gamblers for tax purposes because a professional gambler is viewed as engaged in the trade or business of gambling. The professional gambler reports gambling winnings and losses for federal purposes on Schedule C, Profit or Loss From Business. To compute his or her business income, the professional gambler may net all wagering activity but cannot report an overall wagering loss. In addition, the taxpayer may deduct 'ordinary and necessary' business expenses (expenses other than wagers) incurred in connection with the business.

Whether a gambler is an amateur or a professional for tax purposes is based on the 'facts and circumstances.' In Groetzinger, 480 U.S. 23 (1987), the Supreme Court established the professional gambler standard: 'If one's gambling activity is pursued full time, in good faith, and with regularity, to the production of income for a livelihood, and is not a mere hobby, it is a trade or business.' The burden is on the gambler to prove this status.

In addition to applying the standard established in Groetzinger, courts sometimes apply the following nonexhaustive nine-factor test in Regs. Sec. 1.183-2(b)(1) used to determine intent to make a profit under the hobby loss rules to decide whether a taxpayer is a professional gambler:

• The manner in which the taxpayer carries on the activity;
• The expertise of the taxpayer or his advisers;
• The time and effort the taxpayer expended in carrying on the activity;
• An expectation that assets used in the activity may appreciate in value;
• The taxpayer's success in carrying on other similar or dissimilar activities;
• The taxpayer's history of income or losses with respect to the activity;
• The amount of occasional profits, if any, that are earned;
• The financial status of the taxpayer; and
• Elements of personal pleasure or recreation.

What Is Considered A Professional Gambler

What if a professional gambler's 'ordinary and necessary' business expenses exceed the net gambling winnings for the year? In Mayo, 136 T.C. 81 (2011), the court held the limitation on deducting gambling losses does not apply to ordinary and necessary business expenses incurred in connection with the trade or business of gambling. Therefore, a professional gambler may report a business loss, which may be applied against other income from the year.

LIMITATIONS ON LOSS DEDUCTIONS

Some states do not permit amateur gamblers to deduct gambling losses as an itemized deduction at all. These states include Connecticut, Illinois, Indiana, Kansas, Massachusetts, Michigan, North Carolina, Ohio, Rhode Island, West Virginia, and Wisconsin. A taxpayer who has $50,000 of gambling winnings and $50,000 of gambling losses in Wisconsin for a tax year, for example, must pay Wisconsin income tax on the $50,000 of gambling winnings despite breaking even from gambling for the year.

Because professional gamblers may deduct gambling losses for state income tax purposes, some state tax agencies aggressively challenge a taxpayer's professional gambler status. A taxpayer whose professional gambler status is disallowed could face a particularly egregious state income tax deficiency if the taxpayer reported on Schedule C the total of Forms W-2G, Certain Gambling Winnings, instead of using the session method under Notice 2015-21. In this situation, the state may be willing to consider adjusting the assessment based on the session method if the taxpayer provides sufficient documentation.

For a detailed discussion of the issues in this area, see 'Tax Clinic: Taxation of Gambling,' by Brad Polizzano, J.D., LL.M., in the October 2016 issue of The Tax Adviser.

—Alistair M. Nevius, editor-in-chief, The Tax Adviser

The Tax Adviser is the AICPA's monthly journal of tax planning, trends, and techniques.

Professional Gambling

What Is A Professional Gambler

Also in the October issue:

Professional Sports Bettors

• An analysis of executive compensation clawbacks.
• An update on recent developments in estate planning.
• A look at revisions to Forms 1042-S and W-8BEN-E.

AICPA members can subscribe to The Tax Adviser for a discounted price of $85 per year. Tax Section members can subscribe for a discounted price of $30 per year.