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Good morning. Regulation 1.165-10 provides that gambling losses sustained during the tax year on wagering transactions are deductible only to the extent of gains from such transactions. That means that you cannot claim losses beyond what you have wagered. What constitutes a transaction is addressed by the IRS in a Chief Counsel Memorandum. An example in that Memorandum provides as illustration a taxpayer who went to a casino to play the slot machines ten times during the tax year, each time purchasing $100 worth of tokens. On five occasions, the taxpayer lost the entire $100 in tokens. On the other five occasions, the taxpayer redeemed tokens for $20, $70, $150, $200, and $300. Discussing the results of various court decisions, the IRS notes that attempting to trace and recompute basis after each play would be unduly burdensome and unreasonable. The fluctuating wins and losses during the taxpayers casino stay are not accessions to wealth until the taxpayer redeems her tokens to definitively calculate the amount above or below basis (the amount of the original bet) that has been realized. Thus gain or loss may be calculated over a series of separate plays or wagers.
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Hello and thank you for allowing us at Just Answer to assist you. Sounds like you could qualify as a professional gambler. If this is the case, you would show all of your gambling winnings and losses on Sch C. You can still only claim the losses to the extent of your winnings.
But, because of a recent tax court case, you can claim some additional expenses such as travel or automobile as expenses. You should not owe any taxes, and you will get the $50 back.