Final Opportunity

[arcimede$]

It appears Singer has never heard of a clasp envelope. LOL.

[redietz]

Let's wrap this up. It's -340 that Rob's returns do not make it to Alan, and the deadline is four days hence. Looks as if the chalk bettors are going to collect.

[Alan Mendelson]

There are some errors here:

1. cost basis for investments. Have you ever sold a stock that you owned for 30 years and tried to determine capital gain or loss?

Your tax returns will not show your cost basis for any investment. Cost basis is best determined by the the actual transaction slips from a broker or receipts or broker reports.

2. Movements between professional gambler status and non-professional status. It helps to have prior years records to establish profit or profit motive when needed.

Previous results from gambling would have no effect on your current year's taxes. There is no "income averaging" for example. You do want to show that you had a profit for several years to justify your claim that you are now a professional. If previous tax returns only showed losses, the IRS would consider your casino adventures a hobby.

3. It takes up one drawer in my file cabinet. What's the harm.

True, a final copy of a tax return might be ten pages. But it's the supporting documents which take up boxes. Do you hold all of your W2Gs, ATM receipts, logs, dinner receipts, mileage logs, hotel receipts, buy-in receipts to tournaments, casino win/loss statements? If a previous return is audited the final return alone does you know good. So, if you are keeping your return you have to keep your supporting documents. When I recently moved, I shredded and tossed out tax returns and supporting documents going back to 1981.

4. As a former tax attorney it's just a fetish I have.

I have my senior prom picture somewhere. She had quite a figure.

[regnis]

Alan--

1. The tax file, not the return, has the basis. I just happen to keep that in that file.
2. When you flip between pro and non-pro status (not advised) you still want prior years income to show that it is not just a hobby when you are establishing a "for profit" motive.
3. I have all of that on a typed piece of paper due to my anal-compulsiveness.
4. Oddly--I also have your sister's prom picture.

I should also mention that I have large containers in the basement with every losing ticket and a log of every bet made on horses as well. We have no other clutter in the house and those containers take up a quarter of a room in the basement. Those I keep for about 7 years.

[Alan Mendelson]

Alan--

1. The tax file, not the return, has the basis. I just happen to keep that in that file.
2. When you flip between pro and non-pro status (not advised) you still want prior years income to show that it is not just a hobby when you are establishing a "for profit" motive.
3. I have all of that on a typed piece of paper due to my anal-compulsiveness.
4. Oddly--I also have your sister's prom picture.

1. That's right. It's what I said -- it's not in your tax return.
2. The motive means nothing. If you don't have a profit from your gambling for a certain number of years it is still a hobby. We are not talking about opening up a retail store which can lose money year after year and still be a business. If you have different info, please send it along -- then I will amend as many tax returns as I can to deduct all sorts of expenses while I was losing because my motive was to become a professional.
3. Yep -- gotta keep that info because it's not on your tax return.
4. You poor guy. My sister is ugly.

[regnis]

Actually Alan, in all seriousness, a profit is not required at all, although it is certainly better than not having one. The 2 of 7 year profit requirement is not actually a requirement but more of a safe harbor. More important than an actual profit is the manner in which you conduct your "business"--i.e. did you operate in a professional manner with a good faith attempt to make a profit. Did you spend the necessary time in the endeavor; did you operate as a business, etc.

That being said, I can always show a profit if I want to--just don't offset the wins with losses, whether on Schedule A or C, but it has never been necessary.

[Alan Mendelson]

The IRS guidelines are pretty clear. I wouldnt even try to claim I had a gambling business nor would I routinely deduct my groceries as a business expense.

[Rob.Singer]

Certain things you wouldn't do Alan because you don't know what the specific regulations say. That's one of the most prolific ways the IRS utilizes to get more money from taxpayers w/o having any trouble in doing so. It's more than clear that you've been paying more than your share of taxes over the years, and you're not alone. What is available in the enormous, convoluted tax code could not possibly be common knowledge for everyone to use. It's kind of like how Obama got the foolish healthcare law passed without any of the lawmakers having a chance to read it. Now, those interested in what it has to say find a way to read it. Just like I did when I decided to file as a professional gambler. And those who choose to stay on the outside so they can criticize others are free to do so, while those of us who chose to do our homework enjoy the extra cash that is legally ours.

The profit angle regnis is getting at is quite true. While all the internet chatter suggests a profit needs to be shown for a few years, in my audits they didn't show a bit of interest in that aspect. I had a ton of gross profit, but nearly all of it was mitigated by expenses--and a good portion of those were expenses I would have incurred in everyday living anyway. It's all in how willing you are to use your own head instead of accepting the garbage put out there by people like Jean Scott and a few others who sell books on the subject. It's similar to all those commercials we get saying how this or that company can help you out of your IRS tax problems at a fraction of the bill, only to have to pay those companies for the information on how to do it. But reality states that any taxpayer can get the exact same deal if they speak to any IRS agent, with no 3rd party involvement. People are basically gullible & stupid--that's the bottom line.

[Rob.Singer]

Let's wrap this up. It's -340 that Rob's returns do not make it to Alan, and the deadline is four days hence. Looks as if the chalk bettors are going to collect.

Red, you're still looking at this backwards. How about telling us the odds that arci does what he said from the beginning and requests all tax returns?

[Alan Mendelson]

in my audits they didn't show a bit of interest in that aspect. I had a ton of gross profit, but nearly all of it was mitigated by expenses--

Really Rob. I can't wait to see your returns.

[slingshot]

Slingshot, for one.

Just for the record, I HAVE formed my OWN versions of his methodology. It took me a couple of years, but I finally modified it to my liking. I said from the beginning that all this would never prove anything. I am not a tax expert, but after weeks of searching info, I can see where either party could do his own income vs. expenses thing. My Dad always told me to not believe what a person says-try it yourself,then decide. He also said to stay out of other people's business- just mind my own. I think I've done both.

[Alan Mendelson]

My Dad always told me to not believe what a person says-try it yourself,then decide. He also said to stay out of other people's business- just mind my own. I think I've done both.

Too bad Rob never followed your Dad's advice and didn't criticize others.