Have you heard how this has worked in practice when audited? What more can they ask for besides your log, bank statements I guess? I have heard casino win loss statements aren't valid tax documentation.(Bold Added)This discussion is thus far predicated on the lowest common denominator and presented in the simplest of terms. US gambling taxes are far more complicated in reality--as everything related to the IRS has always been.
Other than '00-'09 when I filed Schedule C's, every year I've had to make multiple passes when filling out the tax forms just to claim to feel comfortable with how I was being screwed. A large part of that came from my time as a UK resident, where I had to deal with their version of the IRS. They call it Inland Revenue. Over there, you win £1200 on a slot game or a million pound lottery, it was tax free. Not sure if it's still that way today or not.
But with the IRS it's not as simple as it seems by saying "you can write off losses, if applicable,
up to the extent of your winnings". If you have $279000 in W2G's (plus other winnings totalling $2157 for those who for some reason think it "pays to do things right") then you are allowed to deduct up to $281157 in losses. Poof!--all those pesky signers have been mitigated, right? And who's stupid enuf here to think that's all there is to it?
If you're a Simple Man (yes, the greatest of the Lynyrd Skynyrd songs--the best damn band to ever play live in concert) then you would expect to be going happily on your merry way. But the IRS code and its income-reporting ramifications has far more in store for you--and most people who choose to get involved with casino gambling in the US.
Without going too deep, gambling income, regardless of how much you honestly or dishonestly "wipe out" as losses on Schedule A, always grows your AGI (adjusted gross income for you tax evaders out there) and if you're any kind of successful person and for many varying reasons, you do not want that. Even if you're a bum it can hurt. For instance, remember those free "big checks" the federal Government sent out and/or whatever other "freebies for slugs" came along? Being eligible was all based not on work income or welfare income or SS income etc., but on AGI.
Similarly, because our ridiculous tax code was written by someone with a fried brain, gambling-enhanced AGI's more often than not trigger the unexpected but inescapable AMT (alternative minimum tax) which if you don't prepare for by going thru the IRS's typically nonsensical "keep peeling down the onion" worksheet before filing, you'll eventually feel it since that's a computer-generated audit flag in the form of a big bill.
Homeslice, that's basically the first sentence of my first post on this. If you have six-digits in W2-G's, and I would think particularly if your regular income isn't particularly high, the IRS is going to likely request better proof of offset than your personal gambling log; I'm mostly thinking of folks who get a W2-G here or there, and not for any crazy six-figure amounts (or total) could offset it easily enough. I will grant that you went into more detail about AGI and very significant amounts of W2-G's than I'd have been aware of without researching it.