Green V. Green Gambling Case Study

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Issues & Facts Dr. Green is a practicing physician in Chicago who, as an avid blackjack and slot machine player, travels to Las Vegas every other weekend to gamble. He would like to know what criteria are used to determine whether his gambling activities constitute a trade or business for federal income tax purposes and whether or not you think his gambling activities qualify for trade or business status. The phrase "trade or business" is used repeatedly throughout the Internal Revenue Code. Despite its regular use of that term the code or the Treasury Regulations do not define that phase. It is up to the courts to state the facts and mark the legal points. Even in the eyes of the court or the business world the question is whether an income-producing activity constitutes a trade or business. The Internal Revenue Service has defined "trade or business" as an activity carried on for livelihood or for profit. For an activity to be considered…show more content…
Green's wife, Mrs. Green, gambles to the same extent that Dr. Green gambles. Assume that the Greens file a joint tax return. If Mrs. Green has a large net gambling gain for the year and Dr. Green has a large net gambling loss, can they combine their gambling transactions and use his loss to offset her winnings? Gambling winnings are taxable on your tax return. You can deduct gambling losses on your tax return only if you itemize tax deductions and only to the extent of your gambling winnings. Claim your gambling losses as a miscellaneous tax deduction on Schedule a of Form 1040. It is important to keep an accurate diary or similar record of your gambling winnings and gambling losses. To deduct your gambling losses on your tax return, you must be able to provide receipts, tickets, statements or other records that show the amount of both your gambling winnings and gambling losses. You cannot deduct or carry forward a net gambling loss on your tax return; even if you are a professional

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