Professional Gamblers Can Now Fully Deduct Business Expenses



If you’re a professional gambler, we have news that will get your blood pumping. According to a recent article in the Las Vegas Review-Journal and a leading poker tax authority, professional gamblers can now deduct business expenses, even in the event of an overall loss. Now, out of pocket expenses like driving to and from a casino and any fees that may be incurred along the way can be written off as expenses.

Noted poker tax expert Ann-Margaret Johnston told Poker News Daily this week that she had believed this to be the case all along: “The recent ruling is a victory for poker players for a change. This makes it where we can finally treat the expenses by pros as actual write-offs even though they may not have income.”

Johnston explained that the lay of the land prior to this year’s ruling was quite murky. “No one had any clue what to do in the past,” Johnston confessed. “I have always taken those expenses for my clients, feeling I could defend it. Now, we are assured that this is legitimate. All we need now is a ruling that losses can be taken when they exceed income and we will have it made!”

A side benefit to the ruling, according to the Review-Journal, is that it legitimizes gambling as a profession. The article quotes Steve Johnson, a professor at the University of Nevada’s Boyd School of Law, as saying, “What the decision says is that gambling is a business trade that is not any different than any other profession. A professional gambler can deduct business expenses.”

The change in policy is a result of a case involving Robert Mayo, who listed nearly $11,000 in expenses on his 2001 taxes. Mayo wagered $131,000 in horse racing bets and brought in $120,000. The Review-Journal explained, “As part of his tax return that year, Mayo listed expenses of $10,968, which included automobile expenses for travel to the racetracks, and fees for race handicapping information and other research purposes… The court ruled those expenses were not a wagering loss, but business expenses that contributed to a net operating loss for the year.”

Professional gamblers will be able to alter their last three years’ worth of returns accordingly. Previously, expenses were only deductible up to the amount that a player won. This left accountants like Johnston in a bind and awaiting a court ruling such as the one that occurred in January.

As an important caveat, players must be considered professional gamblers in order to qualify vis-à-vis the new ruling. This, according to the Review-Journal, means they derive most of their income from gambling. The Internal Review Service plans on examining each person’s case individually and did not comment to the Nevada news outlet other than saying it would act on a “case by case basis.”

Poker players are saddled with expenses like flying to tournaments, hotel fees, and meals. In the case of cross-country trips or sojourns out of the country, these expenses can add up fairly quickly. The World Poker Tour, for example, holds tournaments in states like California, Nevada, Indiana, New Jersey, and Florida. Expenses are entered on Schedule C of a person’s tax return and this year, every resident of the United States must file his or her taxes by April 18th.

Johnston has poker-playing clients in 30 states and her roster includes Memphis resident and 2003 World Series of Poker Main Event champ Chris Moneymaker. Visit PokerDeductions.com for more details.

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