Tax Tip #244

Jill likes to go to Atlantic City (AC) to gamble. Jill is not a professional gambler but due to her frequency of visiting AC, she receives perks such as vouchers for free meals or drinks, complimentary overnight stays, and tickets to attend shows at the local comedy club. The total value of all the perks Jill received from the casino is $5,000. 

For the year, Jill had gambling winnings of $9,000. Jill owns a home and her taxes, mortgage interest, and donations provides a greater benefit than the standard deduction. Jill also had gambling losses of $15,000 for the year. 

How much can Jill deduct in gambling losses for the year on her tax return?

A) 0

B) 9,000

C) 9,000 with 6,000 of losses carried over to the following over

D) 14,000

E) 14,000 with 1,000 of losses carried over to the following over

F) 15,000

G) 20,000

Answer: if you guessed D then consider heading to AC to continue riding your hot streak!

The comps are considered gains from the gambling activity and are treated as gambling winnings for purposes of reporting the income and determining how much of the gambling losses will be allowed as an itemized deduction. Gambling losses are deductible up to gambling winnings. Excess losses are lost.