For individual taxpayers, Congressional intent was to disallow the deduction of wagering losses on IRS Schedule A. This act amended IRC Section 165(d), and applies to the taxable years 2018 to 2025. On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Acts (TCJA). The auditor included accuracy-related penalties of 20.0%.
The taxpayers calculated their wagering gains and losses by using the “gambling session” methodology.However, both of the taxpayers calculated their income using the “gambling session” methodology as described by IRS Chief Counsel Memorandum 2008-011: Reporting of Wagering Gains and Losses.Įven though our sample size only includes two taxpayers so far, some interesting observations can be made. They received similar letters from the IRS notifying them that their 2018 income tax returns were selected for audit because of “unreported gambling winnings.” The amount of additional tax, interest and penalties are significant. In one week, we were contacted by taxpayers in Oklahoma and Wisconsin.