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that show money was withdrawn from your account that same day.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.
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