When are Gambling Expenses Deductible


A recent Tax Court case, (Mayo, (2011), 136 TC No. 4) held that expenses incurred by a professional gambler were deductible as trade or business expenses on the gambler’s Schedule C of Form 1040. In this case The IRS claimed that the taxpayer who is a professional gambler, was only allows to deduct expenses incurred in relation to gambling winnings to the extent of gambling losses (only). The point of contention came down to whether the general rule that gambling losses are limited to gambling winning included expenses incurred. Here the taxpayer’s gambling losses were less that his gambling winnings.

The Tax Court disagreed with the IRS and found that the taxpayer could deduct his “expenses” in addition to gambling losses.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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