Comps and Taxes?

[FloridaPhil]

[quote=vman96]The way Bob wins is he gains more comps/cash back than what he expects
to lose playing the actual game.[/quote]If I understand this correctly Bob loses money on the actual game, but counts on the cash back and comps to turn the game positive? This got me thinking whether or not the comps are taxable.  If you are are gambling $20,000 an hour and they give you cash back, a comped hotel suite, free food and free theater tickets, do you have to report this to the IRS along with your W2Gs? If not, it looks like you could show you are losing money when in fact you aren't.

[notes1]

it is my understanding that the IRS only allows losses up to the point of winnings. a non pro cannot claim any losses from casino play over and above what they claim as wins and you can bet the government has high theshhold to claim 'pro' status.

[FloridaPhil]

Let me state my question another way.  Let's say a professional video poker asks the casino for an annual play history report for his taxes and it shows he lost $100,000 playing video poker.  The cash back and comps are actually worth $200,000 putting him into the black. I know he can't claim a loss on his taxes, only offset his winnings.   Does he get to keep the comps and cash back tax free?

[MPD001]

you can bet the government has high theshhold to claim 'pro' status.
The IRS (ie government) has no say in what profession you declare. If you claim that you earned money at some endeavor, like gambling, you can declare yourself a pro for tax purposes.

If you played at a casino as a pro, you would have to declare all the comps as income, but you would also be able to deduct all your expenses, such as travel.

Someone like Bob Dancer, who earns money based on his knowledge of VP, would have a tough time with the IRS if he said that he was NOT a pro.

[notes1]

[QUOTE=notes1]
you can bet the government has high theshhold to claim 'pro' status.
The IRS (ie government) has no say in what profession you declare. If you claim that you earned money at some endeavor, like gambling, you can declare yourself a pro for tax purposes.

If you played at a casino as a pro, you would have to declare all the comps as income, but you would also be able to deduct all your expenses, such as travel.

Someone like Bob Dancer, who earns money based on his knowledge of VP, would have a tough time with the IRS if he said that he was NOT a pro. [/QUOTE]
 never held myself out as a tax expert and did not say the IRS can determine your declared occupation. but, you better believe they will look hard at anyone claiming gambling losses over and above winnings, if you declare yourself a 'pro'. ever try fighting the government, they have an endless pocketbook and you do not. according to 'journal of accountancy', regs. sec. 1 183-2(b), there are 9 factors the IRS uses to determine if one can be considered a 'pro'. included in those factors are requirements like not having substantial income from other sources and having only  substantial loses from gambling, may not indicate gambling is being done for a profit. as far a mr. dancer goes, he has declared he had no winings (he never knows who may be reading his posts- IRS?) for 2014. likely his income came from fees/royalities on sales from products he endorses and casino apperances, to draw players. this income would be treated like income any of us would earn. if there is one field that mr. dancer is an expert on, i would guess it would be how gamblers and gambling are treated by the IRS. i will bet he knows a lot about this. 

[olds442jetaway]

I don't believe there is a general tax court or revenue ruling on the type of comps most of us receive such as food, shows, rooms, etc. However, the court has ruled over the years some things are considered income if you had a financial improvement or gain in wealth as a result. An example would be a car given to you by the casino or expensive jewelry. There is one case where a casino gave a patron 5 separate Rolls Royces, other exotic cars and on and on. In some cases, the comps such as rooms and food have been determined to be kind of an adjustment to the cost of playing or to simplify it a reduction in the purchase price of the cost of gambling. Kind of weird and rulings will vary on a case by case basis. Sometimes, the IRS does not even like the gambler to include the value of comps such as rooms in with gross income since it makes room for larger loss offsets. This entire thing is a very gray area.

[alpax]

I agree with olds that the taxable stuff should be based on what brings thing to a positive monetary value.

If we were actually taxed on comps, then the government would start imposing tax on using coupons at the grocery store and stuff.

Now if they give you more than what the food or hotel room costs, then. But usually the fine print says that change is not provided or cannot be used towards gratuity.

I did win a $1000 free play in the past twice, but I was not taxed on that. I am forced to spent that on the machines and have not much other freedom until I put through it at least one cycle.

[spxChrome]

Its strange to me I have won free play before and had to fill out a 1099 not W2G and at other casinos they don't require it. Not sure what the deciding factor is. Both were wins of $1000.

[notes1]

Its strange to me I have won free play before and had to fill out a 1099 not W2G and at other casinos they don't require it. Not sure what the deciding factor is. Both were wins of $1000.
  not a tax expert, but not sure how winning 'free play' should be considered taxable. one could actually net zero cash.

[MPD001]

Its strange to me I have won free play before and had to fill out a 1099 not W2G and at other casinos they don't require it. Not sure what the deciding factor is. Both were wins of $1000.
If the FreePlay was a prize or award of some sort, like a drawing, and over $600, I believe that a 1099MISC is required to be used for reporting.