Originally Posted by
regnis
It is the dark hole of taxes. How does one qualify as a professional gambler. The rules, regulations, and writings are vague, and the case law is all over the place. The first misconception is that you have to show a profit--some say 2 of 7 years. That might help but it is really only a minor factor. The facts of each case will dictate, but the most important factor is to show an intent to operate for profit. It need not be your sole income but if it is your sole source of income that helps.
How do you show an intent to operate for profit? In the case of a horseplayer, there is the time and effort put into handicapping. Subscriptions to the daily racing form, charts, race replays, etc. These unfortunately are not easy to prove. The sheer volume of wagers and the number of days that you wager are factors. Now with tournaments almost daily you can more easily prove time invested. Statements from racetrack management can be used.
Whatever the type of gambling that you are trying to prove is professional, similar evidence is needed. But the essence of the proof in court is really time. What kind of time is involved. Secondarily, do your actions seem to be that of a pro. Are you doing the right things to make a good faith attempt at a profit.
So how can you show enough time in multiple businesses? I had that problem in years in which I both gambled (horses) and practiced law. I was able to show that I operated both with the intent to profit, although it looked to the IRS like I never slept. Later, when I had a number of years where my sole income was gambling, I was questioned as to what happened to my "legitimate" income.
In Singer's case, I assume he lumped the whole VP, writing, teaching, etc. into his Schedule C as one "business". In horse racing, the same thing is done where one both owns and races horses and gambles on them. It gives the look of an intent to profit and allows for the type of deductions that Rob has claimed.
It is not for everyone. You must be organized and structured and just give the appearance of a professional. I keep a journal and all losing tickets in organized boxes. The IRS can match the losing tickets daily to my journal. I'll never forget the agent's face on my first audit when I dropped that box of organized losing tickets in his lap. I have about 30 years of those boxes in my basement.