Appeals Court Finds IRS Can’t Tax Some Gambling Winnings
In a ground breaking decision that should make many gamblers living in the USA smile, an Appeals Court has ruled that the Internal Revenue Service (IRS) cannot tax types of gambling winnings. There is, however, an emphasis on the word “living”.
That’s because the D.C. Circuit Court of Appeals has ruled nonresident aliens can only deduct items effectively connected with the conduct of a trade or business within the U.S. As a result, gambling losses are not deductible by a nonresident alien.
Previous rulings have favored US citizens, with the courts ruling in 2008 that gamblers could now measure their gains on a per-session basis and, as such, better calculate their annual profit or losses from gambling at year’s end as opposed computing each wager separately.
In a nut shell, the Appeals Court ruled that the per-session rule applies to residents and nonresidents alike.
A gentleman by the name of Sano J. Park, a foreign national who frequented the US, filed the suit after the IRS initially claimed that his wins were “effectively connected” to the U.S., but not his losses! And, as Forbes.com points out, the U.S. Tax Court agreed.
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- Gilbert Horowitz, Gambling911.com