tax question for Bostonia?

Question

(from the guy with the 5 years of returns to file)
On the gambling issue, would you put both the winnings and the losses on Schedule A? Also, if I do not have the records showing the losses, they would still have to audit me, right? So if I do not get audited would you go ahead and do it? And if I do get audited, is the worse that can happen a penalty, or could this be criminal? Where on my tax returns can I put a statement showing that the casino was ruined in the hurricane? I already tried getting records from the casino "receivership office", all I have gotten is the runaround.

Answer 1

The winnings go on the Other Income line on your tax return.

The losses go on Schedule A as an itemized deduction. The deduction is limited to the amount of your winnings.

If you don't get audited, you have nothing to worry about. But if you can reasonably reconstruct your records that were kept at the time of the gambling action you should do OK on an audit as well. As I said earlier, you do have a valid excuse for the loss of the records and the IRS generally IS reasonable when dealing with this type of problem.

In the worst case, you'd have the deduction for gambling losses disallowed and would be assessed the tax due, probably including penalties and interest. It would NOT be a crimminal matter, however, so rest easy on that, OK?

Reconstruct your records as best you can, and note the facts on the reconstructed records. Have them available IF the IRS audits you. If they don't, you have nothing at all to worry about. And even if you are audited, you should come out fine.