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Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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This is about gambling losses. Casinos will give win / loss

Resolved Question:

This is about gambling losses.
Casinos will give win / loss statements if you use a card in the slot machines. How do I get a win / loss statement for CASH that has been won and lost back without using a card. Casinos have not always had the card over the years so there must be some system in place to track this. The problem is that the casino gives you and the government a tax statement showing your winnings. If you lose these winnings back to the casino in cash, the only thing you can show is a win. This is more complicated by a couple things.
One: This was an Indian casino which I am told they are sovereign and not governed by any state laws.
Two: The person that won / lost was under psychiatric care, on medication, and suffering from PTSD.

The amount won / lost was approx. $680,000.00. Nothing to show for it and a large tax burden that could financially burden them for life. What options are there to getting this resolved?
Submitted: 4 years ago.
Category: Tax
Expert:  Merlo replied 4 years ago.
HelloCustomer

Are you saying that this person had reported winnings of $680,000 and now needs loss records to offset those winnings?

If this person had winnings of $680,000, was that amount deposited somewhere in a bank account where there would be a record of the withdrawals made against it?





Customer: replied 4 years ago.
The amount was won and lost in the casino. As far as I know it never left the casino. Cash won was pumped back into the machines.
Expert:  Merlo replied 4 years ago.
So you are saying that this person put $680,000 back in to the slot machines all in the same day, is that correct?

Did the casino pay this person in cash or with a check? Did they withhold any taxes from her winnings?

Customer: replied 4 years ago.
Not in the same day, but over a period of days. Took the cash, came back, put it all back in. Casino paid out in cash. Bizarre as it seems, this person carried a ton of cash in and out till all winnings were lost back to the casino. It's that straight forward. Remember this person was suffering from PTSD and on medication. Would go for days without sleep and just keep playing.Casino asked if they wanted to be excluded, but there was no stopping. Sad but true. No taxes were withheld.
Expert:  Merlo replied 4 years ago.
Hello again Schwieger,

If you are unable to obtain a loss statement from the casino, then you would have to rely on written records (or a log of sorts) that was kept by this person which was a detailed recap of all his losses. Normally in cases where a loss statement or actual losing wager receipt is not available, the IRS would require that a log be kept by the individual which showed the date he gambled, the casino he went to, the average amount of wagers he was making, the type of game he was playing and a record of his wins or losses. It is also helpful to have records of bank withdrawals or ATM transactions that show money was withdrawn from your account that same day. And from what you have said, bank records would not be available.

However, you could still have this person try to reconstruct a diary of sorts to recap all of the other information. There at least certainly should be a record that this person was paid that much money in cash, so if there are no records that the cash was ever deposited with a bank, then that could possibly help to explain why no bank withdrawals were ever made.

You would not actually need to submit these records with your tax return to claim the loss, but you would need them in the event the IRS decided to audit the return and questioned the validity of the losses. If that were to occur and the records were not sufficient for the IRS, then at that time they would make this person pay any taxes due on the winnings if the losses were disallowed. But without any other types of records, this would be the only thing you could try at this point. If the person claims the losses and never gets audited, then they will not end up owing any tax on the winnings.

If this was helpful please press the Accept button.

Thank youCustomerbr />
Customer: replied 4 years ago.
I already know all this. What I am looking for is a way to get the information from the Casino. For years before the casinos used cards there must have been some way to get a win loss statement for cash. We have the dates and times at the casino. video taping is done 24 / 7 at all machines. Computers are now tied to the machines and I am sure the casino knows which machines are played and how much they bring in at any given time. Is there some way to get this information? If not and this person has to rely on a log put together thru a medicated cloud, I am afraid that this will destroy any chance of clearing this up.
It will destroy this person financially and destroy any hope of recovery. This is very complicated I know, and I appreciate your advice, but I need something more to go on.
Expert:  Merlo replied 4 years ago.
Hello againCustomer

You are right that before the days of player cards, there were still ways to track the play of certain individuals, but that was mainly done for customers who were frequent visitors and were known by the casino staff.

As far as the surveillance that the casinos have, they most certainly would have this person on camera, but even there the problem is that these casinos are not required to keep their surveillance tapes for a very long period of time -- usually around 2 weeks for most casinos. So any tapes they may have had are more than likely long gone by now.

But I think the real problem here is the fact that there is nothing that you can do to force the casino to give you a loss statement. I agree that this is something that most casinos do willingly for their customers, as they certainly want to work with their customers in every way possible and not lose your business. But even though most casinos do offer these loss records, they do this as a service to their customers, and not because they are under any obligation to provide you with that information. The only thing they are obligated to do is report winnings once those winnings exceed a certain amount. The burden of proof to deduct losses has always been on the taxpayer, and not something that the casino is obligated to provide you with.

That is why I recommended the option of trying to help this person reconstruct some records, as this will really be his only option if the casino is not willing to provide you with loss records.

I wish I could be of more help to you in this situation, but under the circumstances your choices are really limited as to what you can do.



Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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