1 00:00:08,519 --> 00:00:12,560 Speaker 1: Good afternoon. You're listening to Gambling with an Edge. Now 2 00:00:12,599 --> 00:00:17,640 here are your hosts, Bob Dancer and Richard Munchkin. Good afternoon, 3 00:00:17,839 --> 00:00:20,519 Welcome to Gambling with an Edge. I'm Bob Dancer. 4 00:00:20,440 --> 00:00:21,559 Speaker 2: And I'm Richard Munchkin. 5 00:00:22,399 --> 00:00:26,399 Speaker 1: In one of our irregularly scheduled podcasts, today, we interview 6 00:00:26,480 --> 00:00:31,839 gambling tax expert Russell Fox in an episode primarily dedicated 7 00:00:31,879 --> 00:00:35,359 to how the new tax bill affects gamblers and what 8 00:00:35,439 --> 00:00:39,320 we can do about it. Russell Fox, Welcome to Gambling 9 00:00:39,320 --> 00:00:42,679 with an Edge. Glad to be here, Glad to have 10 00:00:42,759 --> 00:00:46,640 you here. Let's get right into it. How does the 11 00:00:46,719 --> 00:00:49,880 latest tax bill affect gamblers? 12 00:00:50,280 --> 00:00:54,600 Speaker 3: Well, the bill is actually the Porcheawne. Gambling incredibly simple 13 00:00:55,039 --> 00:00:59,280 and roughly ninety five percent of gamblers, but not ninety 14 00:00:59,280 --> 00:01:03,600 five percent of your listeners won't be impact for amateurs. 15 00:01:03,719 --> 00:01:08,200 Take your gambling losses multiplied by ninety percent, and those 16 00:01:08,200 --> 00:01:13,079 are your tax gambling losses. Further, gambling losses remain only 17 00:01:13,120 --> 00:01:17,159 deductible to the amount of winnings. Effectively, if your gambling 18 00:01:17,200 --> 00:01:20,560 losses are one hundred and eleven percent of gambling winnings, 19 00:01:21,000 --> 00:01:23,640 you will not be impacted by this law. Or know 20 00:01:23,760 --> 00:01:27,439 more than one hundred and eleven percent two. Most amateur 21 00:01:27,439 --> 00:01:30,480 gamblers lose at least one hundred and eleven percent of 22 00:01:30,519 --> 00:01:36,280 gambling winnings. For professional gamblers, gambling related business expenses are 23 00:01:36,359 --> 00:01:40,280 considered in the same category as losses, you only get 24 00:01:40,480 --> 00:01:46,280 ninety percent of them. This law will especially hurt high volume, 25 00:01:46,560 --> 00:01:52,079 low margin gambling. Sports betting, and certain advantage play unfortunately, 26 00:01:52,159 --> 00:01:55,599 will be hit under this new measure, which goes into 27 00:01:55,680 --> 00:01:59,000 effect for the twenty twenty six texture, does no impact 28 00:01:59,079 --> 00:02:03,920 on twenty five. A contemporaneous gambling log is a musk, 29 00:02:04,439 --> 00:02:08,759 either written on paper or using an app. Gamblers who 30 00:02:08,879 --> 00:02:12,199 use the session method will be less impacted than gamblers 31 00:02:12,240 --> 00:02:16,960 who don't. Additionally, neither the IRS nor the tax court 32 00:02:17,319 --> 00:02:19,919 have any sympathy for gamblers who don't have a log. 33 00:02:20,800 --> 00:02:24,400 Speaker 1: As a video poker player, I play perhaps one hundred, 34 00:02:24,400 --> 00:02:28,479 excuse me, one thousand hands per hour. Some I score on, 35 00:02:28,759 --> 00:02:32,360 some I don't, Some I break even on In some games. 36 00:02:32,479 --> 00:02:36,120 Sometimes I collect less than my initial wager. At the 37 00:02:36,240 --> 00:02:39,080 end of my session at a particular casino, I record 38 00:02:39,159 --> 00:02:44,039 my score plus or minus along with any w twog's accumulated. 39 00:02:44,840 --> 00:02:48,159 How is this recording system affected by the new law. 40 00:02:49,080 --> 00:02:51,840 Speaker 3: It's not that is exactly what you're supposed to do, 41 00:02:52,039 --> 00:02:55,400 other than you have to use the session method. It's 42 00:02:55,439 --> 00:02:59,080 allowed for various court cases, such as Park v. Commissioner. 43 00:02:59,639 --> 00:03:02,680 What you leave the casino with less what you begambling. 44 00:03:03,639 --> 00:03:07,080 Let's say you have twenty thousand of w twogs for 45 00:03:07,159 --> 00:03:09,879 the session, but your win is only three thousand dollars, 46 00:03:10,159 --> 00:03:13,159 and you note both, along with all the other required 47 00:03:13,199 --> 00:03:19,639 items for a gambling law date, casino name, start, end, times, result, 48 00:03:19,840 --> 00:03:22,759 game you're playing, and if you ever play a table 49 00:03:22,800 --> 00:03:26,039 game the table. When you prepare your tax return, you 50 00:03:26,039 --> 00:03:28,319 will need to note that you have twenty thousand of 51 00:03:28,479 --> 00:03:30,800 w twogs because you have to match what the IRIS 52 00:03:30,840 --> 00:03:33,439 has on file for you, and you take as an 53 00:03:33,479 --> 00:03:38,240 adjustment income the seventeen thousand dollars of gambling losses in 54 00:03:38,360 --> 00:03:41,520 the same session. You probably are going to need to 55 00:03:41,560 --> 00:03:45,439 attach IRIS Form eighty two seventy five to your return. 56 00:03:45,560 --> 00:03:49,000 That's a disclosure statement, and then you're left with your 57 00:03:49,039 --> 00:03:51,319 three thousand dollars of gambling winnings. 58 00:03:51,759 --> 00:03:55,800 Speaker 2: Okay, so what about say you're a sports better and 59 00:03:56,360 --> 00:04:00,719 you bet you know on eight or nine different football games, 60 00:04:00,840 --> 00:04:04,960 in the course of a day. Maybe you also have 61 00:04:05,240 --> 00:04:11,400 some some parlays in there. Maybe you add in some 62 00:04:11,560 --> 00:04:15,719 in game betting during that and you make these bets 63 00:04:16,199 --> 00:04:22,040 at six or eight different sports books. That is that 64 00:04:22,279 --> 00:04:27,839 day your session. Is every sports book a session. How 65 00:04:27,879 --> 00:04:31,800 does a sports better deal with this? Well, we don't 66 00:04:31,839 --> 00:04:34,839 know for sure because there is no case law on 67 00:04:34,920 --> 00:04:39,639 sports betting. Sports betting has expanded drastically in the last 68 00:04:39,720 --> 00:04:43,279 few years. It takes a long time for cases to 69 00:04:43,399 --> 00:04:44,759 make it into. 70 00:04:44,480 --> 00:04:50,560 Speaker 3: The cort system. So with nothing in the definition of 71 00:04:51,240 --> 00:04:54,759 tax code, we have to use both of the dictionary 72 00:04:54,759 --> 00:04:57,879 and common sense to determine what we can combine into 73 00:04:57,959 --> 00:05:01,680 the same session for sports betting. First, the idea that 74 00:05:01,680 --> 00:05:03,879 a session is going to last the entire year a 75 00:05:04,040 --> 00:05:08,720 month is laughable. That has no chance of being upheld 76 00:05:08,720 --> 00:05:11,759 at an audit. Don't try it. Try If you try 77 00:05:11,759 --> 00:05:15,639 to say, oh, it's the entire NFL season, baseball season, whatever, 78 00:05:15,879 --> 00:05:19,959 it is not going to work. But clearly related wagers 79 00:05:20,000 --> 00:05:23,800 should be part of the same session. Consider betting on 80 00:05:23,879 --> 00:05:27,000 a baseball game at Wrigley Field with the wind blowing 81 00:05:27,000 --> 00:05:29,839 out and the opposing picture being a notorious fly ball 82 00:05:29,879 --> 00:05:32,920 pitcher while the Cubs pitcher is a ground ball pitcher. 83 00:05:33,399 --> 00:05:36,079 Betting on both the Cubs and the over for runs 84 00:05:36,399 --> 00:05:40,040 being part of the same session makes sense, and probably 85 00:05:40,079 --> 00:05:43,040 it can be combined. But betting on the Cubs game 86 00:05:43,079 --> 00:05:45,959 in the White Sox game must they're playing each other 87 00:05:46,600 --> 00:05:50,079 like we won't be part of the same session. When 88 00:05:50,079 --> 00:05:53,800 a statute is undefined, courts look at the dictionary definition 89 00:05:53,920 --> 00:05:56,920 for guidance of the meaning of a word. One of 90 00:05:56,959 --> 00:06:01,920 the definitions of session is a single continuous course or 91 00:06:01,959 --> 00:06:05,160 a period of lessons, study, et cetera. In the work 92 00:06:05,199 --> 00:06:09,279 of a day at school. Now there is a period 93 00:06:09,279 --> 00:06:13,040 of time during which a group of persons meets to 94 00:06:13,319 --> 00:06:18,319 pursue a particular activity. Both imply something with the discrete 95 00:06:18,399 --> 00:06:22,600 beginning and end. The IRS Chief Council's Office came out 96 00:06:22,639 --> 00:06:25,560 with a ruling about re entry poker tournaments a few 97 00:06:25,639 --> 00:06:29,680 years ago. They concluded that each tournament entry has separate 98 00:06:29,720 --> 00:06:34,720 conditions and you cannot aggregate one player's results. Albey are 99 00:06:35,360 --> 00:06:41,160 fighting this for casinos, not players, but the problem is 100 00:06:41,199 --> 00:06:45,240 for both dfs and sports betting. Wagering on today's slate 101 00:06:45,279 --> 00:06:48,120 of baseball games has nothing to do with wagering on 102 00:06:48,240 --> 00:06:54,319 football games. In November or even today or WNBA games. 103 00:06:54,720 --> 00:06:58,000 I suspect that both the IRS and courts will rule 104 00:06:58,040 --> 00:07:03,040 that nothing in sports betting and dfs except directly related 105 00:07:03,160 --> 00:07:07,560 wagers can be aggregated. Having said that that's in the future, 106 00:07:08,600 --> 00:07:13,399 likely some date beyond twenty thirty, that means I think 107 00:07:13,439 --> 00:07:17,519 it may underscore the word. May be possible to lump 108 00:07:17,560 --> 00:07:23,000 of days bets into one session, especially with online betting 109 00:07:23,079 --> 00:07:26,680 for an act of better somebody who's betting every day. 110 00:07:26,839 --> 00:07:30,399 It makes some sense, but well, the courts uphold it. 111 00:07:31,040 --> 00:07:32,160 Nobody knows. 112 00:07:32,600 --> 00:07:38,360 Speaker 1: Can we skip back your last question on my video poker? 113 00:07:38,399 --> 00:07:42,360 You posed I had twenty thousand in w twogs with 114 00:07:42,600 --> 00:07:48,879 a three thousand dollars win, and then you said that 115 00:07:48,959 --> 00:07:51,920 means I had seventeen thousand in losses. Does that mean, 116 00:07:51,959 --> 00:07:54,759 according to IRS, I had twenty thousand in wins because 117 00:07:54,800 --> 00:07:56,319 that's what my wtwog's were. 118 00:07:57,199 --> 00:08:01,120 Speaker 3: No, the session method is allowed. Courts allow it. The 119 00:08:01,160 --> 00:08:04,720 IRIS Chief Council came out with a opinion that says 120 00:08:04,720 --> 00:08:07,800 it should be allowed. So in this situation, what you 121 00:08:07,839 --> 00:08:11,759 would note is twenty thousand of gambling winnings. If you're 122 00:08:11,759 --> 00:08:13,959 a gambler on other income. 123 00:08:15,000 --> 00:08:18,600 Speaker 1: And it's only twenty thousand because that's what the wtwogs. 124 00:08:18,079 --> 00:08:21,120 Speaker 3: Are, right, We're just matching the W twogs here because 125 00:08:21,120 --> 00:08:24,120 the IRIS matches. Then if you put down three thousand, 126 00:08:24,120 --> 00:08:26,240 you're going to get an IRS notice. We don't like 127 00:08:26,319 --> 00:08:32,759 IRIS notices. Then below there's a place for adjustments. It's 128 00:08:32,879 --> 00:08:37,120 lining eight Z as in Zebra on schedule one. You know, 129 00:08:37,240 --> 00:08:41,440 put minus seventeen thousand gambling losses in the same session. 130 00:08:42,200 --> 00:08:48,159 And I would advise an amateur gambler to also attached 131 00:08:48,200 --> 00:08:51,159 for eighty two seventy five, which is a disclosure statement 132 00:08:51,759 --> 00:08:55,080 noting what's going on if that ever got the quarter, 133 00:08:55,200 --> 00:08:58,639 and assuming good records, that gambler is going to win 134 00:08:59,480 --> 00:09:04,080 because it the courts allow it, the IRS allows. Key 135 00:09:04,200 --> 00:09:07,200 is you need good records. It's essential. 136 00:09:08,120 --> 00:09:14,200 Speaker 1: Okay, Now let's go to a two slot players advantage 137 00:09:14,240 --> 00:09:20,519 slot players. These players, let's say they stay in one 138 00:09:20,559 --> 00:09:26,000 casino for the day. They may play on thirty to 139 00:09:26,440 --> 00:09:30,480 one hundred different machines. They walk around until they find 140 00:09:30,519 --> 00:09:34,200 a machine in a what they consider a positive state, 141 00:09:35,120 --> 00:09:38,120 and they play it somewhere between one and ten thousand 142 00:09:38,200 --> 00:09:42,240 hands has a result. Now they go to another machine 143 00:09:42,279 --> 00:09:45,519 looking for a game in a positive state, et cetera. 144 00:09:46,559 --> 00:09:51,639 Is each physical machine accession and does each physical one 145 00:09:51,720 --> 00:09:55,519 need to be recorded separately? This is a huge burden 146 00:09:55,559 --> 00:09:57,559 on somebody who played one hundred machines a day. 147 00:09:58,600 --> 00:10:04,320 Speaker 3: No, it can be one together with some caveatsphere. But 148 00:10:05,080 --> 00:10:07,840 the way the courts have looked at it is by 149 00:10:07,919 --> 00:10:11,480 walking to the casino and I start the day with 150 00:10:11,600 --> 00:10:16,320 say ten thousand dollars, and I play various machines, and 151 00:10:16,360 --> 00:10:19,080 I leave the casino with twelve thousand dollars, I have 152 00:10:19,120 --> 00:10:23,120 a two thousand dollars win. That's how it's described in 153 00:10:23,200 --> 00:10:27,080 Park V Commissioner, and that would be applicable to an 154 00:10:27,120 --> 00:10:32,399 advantage player playing multiple machines in the same casino and 155 00:10:32,639 --> 00:10:35,559 in the same session. If you can't, like, go on 156 00:10:35,639 --> 00:10:38,240 the casino at ten in the morning, leave it noon, 157 00:10:38,679 --> 00:10:41,840 go back at four in the afternoon, and leave at six, 158 00:10:41,960 --> 00:10:44,679 that would be two different sessions. 159 00:10:44,399 --> 00:10:46,879 Speaker 2: And that would include table games as well. So if 160 00:10:46,879 --> 00:10:50,919 that same slot player occasionally jumps over and jumps into 161 00:10:50,960 --> 00:10:55,519 a hot blackjack shoe, he's working at that casino all 162 00:10:55,600 --> 00:10:58,440 day long without leaving the casino. 163 00:10:59,519 --> 00:11:03,360 Speaker 3: That is probably not able to be combined because it's 164 00:11:03,360 --> 00:11:07,519 a different game the way it's written, the way the 165 00:11:07,600 --> 00:11:11,919 description of a session is game you're playing. If you're 166 00:11:11,960 --> 00:11:16,240 playing video blackjack, which of course is never going to 167 00:11:16,279 --> 00:11:18,759 be advantage, but who knows. 168 00:11:19,399 --> 00:11:22,080 Speaker 1: Don't count on that. Yeah, maybe there's. 169 00:11:21,840 --> 00:11:26,080 Speaker 3: Some sort of weird promotion or something, but assuming you 170 00:11:26,080 --> 00:11:31,240 know true odds, video blackjack wouldn't be most machines that 171 00:11:31,320 --> 00:11:35,000 could be combined. But a table game, by definition is separate. 172 00:11:35,440 --> 00:11:39,559 It's like a poker player playing a poker tournament, busting 173 00:11:39,600 --> 00:11:43,000 the poker tournament and then playing some cash games. That 174 00:11:43,039 --> 00:11:44,399 would be two different sessions. 175 00:11:45,200 --> 00:11:50,519 Speaker 1: Okay. In the slot example, you just said you entered 176 00:11:50,559 --> 00:11:53,000 the casino with ten thousand, you lead with twelve thousand. 177 00:11:53,080 --> 00:11:56,559 That's a two thousand dollars win. What if you had 178 00:11:56,600 --> 00:11:59,200 five thousand W twogs in that same session? 179 00:12:00,000 --> 00:12:04,440 Speaker 3: You always have to note your W two gs always, okay, 180 00:12:04,759 --> 00:12:08,039 if you have a session lag. The way we tend 181 00:12:08,080 --> 00:12:11,440 to do it, and most tax professionals who specialize in 182 00:12:11,519 --> 00:12:15,279 gambling is we need what is your toll of W 183 00:12:15,360 --> 00:12:18,679 two g's for the year. Let's say it's one hundred thousand. 184 00:12:19,360 --> 00:12:22,600 Then we need your session win total. Let's say it's 185 00:12:22,639 --> 00:12:26,320 eighty thousand, well, we're going to have to. In this case, 186 00:12:26,919 --> 00:12:30,480 we would put down you know, for an amateur gambler 187 00:12:31,200 --> 00:12:36,080 W two gs one hundred thousand and then below gambling 188 00:12:36,120 --> 00:12:40,399 losses in the same session minus twenty thousand, same sessions. 189 00:12:40,399 --> 00:12:45,080 Excuse me, for a professional gambler, we generally, you know, 190 00:12:45,440 --> 00:12:49,080 would do the same thing today because this law again 191 00:12:49,120 --> 00:12:52,000 does not go in effect until twenty twenty six. On 192 00:12:52,039 --> 00:12:55,399 a schedule seat, we put down W two g's one 193 00:12:55,480 --> 00:12:59,720 hundred thousand gambling losses twenty thousand. We get to the 194 00:12:59,840 --> 00:13:03,200 right result. Always want to match the irs numbers. 195 00:13:03,799 --> 00:13:07,360 Speaker 2: So I for one, am very optimistic that this law 196 00:13:07,519 --> 00:13:09,200 is going to get amended. 197 00:13:10,559 --> 00:13:11,159 Speaker 3: There's it. 198 00:13:11,399 --> 00:13:17,679 Speaker 2: There are already, you know, people putting up amendments Titus 199 00:13:17,679 --> 00:13:20,679 from Nevada, and the fact that they're talking about it 200 00:13:20,720 --> 00:13:27,200 on mainstream news as something that's bad I think. So 201 00:13:27,360 --> 00:13:31,279 I'm optimistic, and I'm wondering what your take is on 202 00:13:31,360 --> 00:13:34,879 whether you think this will be overturned. 203 00:13:35,840 --> 00:13:40,360 Speaker 3: It will be overturned if the AGA and Indian gaming 204 00:13:40,559 --> 00:13:44,759 interests want to expend the political capital, and I don't. 205 00:13:44,919 --> 00:13:48,080 I don't think we know the answer to that yet. 206 00:13:48,559 --> 00:13:52,240 Certain aspects of it. I think they're going to I mean, 207 00:13:52,279 --> 00:13:55,000 first of all, there there's new tax law every year, 208 00:13:55,559 --> 00:13:58,720 So is there going to be another tax law later 209 00:13:58,840 --> 00:14:00,519 this year early next year. 210 00:14:00,600 --> 00:14:01,240 Speaker 1: Absolutely? 211 00:14:01,480 --> 00:14:03,320 Speaker 3: Do I have any idea what's going to be in that? 212 00:14:03,559 --> 00:14:07,039 Of course not. Nobody knows today. There are rumors there's 213 00:14:07,080 --> 00:14:11,080 going to be another reconciliation bill. There's something I wrote 214 00:14:11,080 --> 00:14:16,600 about today that really says, please have a technical bill, 215 00:14:16,879 --> 00:14:21,240 basically a bill to fix things. Those are generally bipartisan. 216 00:14:21,480 --> 00:14:26,559 Whether that happens, nobody knows. These are all likely, but 217 00:14:27,559 --> 00:14:33,480 who notes The problem is Titus's bill is unfortunately not 218 00:14:33,559 --> 00:14:36,919 going to ever go anywhere because she has a D 219 00:14:37,279 --> 00:14:41,600 behind her name. This is going to take Republicans. I 220 00:14:41,759 --> 00:14:44,759 you know, I urge everyone who does not like this bill, 221 00:14:44,840 --> 00:14:47,519 which I suspect is about as close to one hundred 222 00:14:47,519 --> 00:14:51,080 percent of your audience as possible if they have a 223 00:14:51,120 --> 00:14:57,159 Republican Congressman or Republican senator, to very respectively, be nice, 224 00:14:57,960 --> 00:15:03,200 write them, email them, and let them know your displeasure 225 00:15:03,279 --> 00:15:06,720 about this portion of the bill. It's a one point 226 00:15:06,879 --> 00:15:11,879 one billion dollar revenue raiser over ten years. There's a 227 00:15:11,879 --> 00:15:15,120 line I love from Lake Paul Volker, who is a 228 00:15:15,159 --> 00:15:19,399 commissioner in the head of the Federal Reserve. Whatever you tax, 229 00:15:19,480 --> 00:15:22,519 you get less of. I am convinced this will not 230 00:15:22,679 --> 00:15:28,279 bring in a billion dollars Yeah over ten years, Harriet, 231 00:15:28,720 --> 00:15:34,000 Yeah yeah. And it is horrible sports bet It's horrible 232 00:15:34,039 --> 00:15:38,080 for sports betting. It's horrible for the states, it's horrible 233 00:15:38,120 --> 00:15:42,600 for the Nevada casino industry. It's just ad. But there's 234 00:15:42,639 --> 00:15:46,559 plenty of bad laws on our books. 235 00:15:46,480 --> 00:15:49,279 Speaker 2: And something people really need to be aware of, and 236 00:15:49,320 --> 00:15:54,240 that is, even if they do come up with an amendment, 237 00:15:55,240 --> 00:15:59,679 say next year, that doesn't necessarily mean that it goes 238 00:15:59,720 --> 00:16:05,879 into effect for twenty twenty six. So you're really gambling 239 00:16:06,080 --> 00:16:09,679 if you decide to gamble in twenty twenty six on 240 00:16:09,799 --> 00:16:12,960 the idea that, oh, they're going to fix this, because 241 00:16:13,000 --> 00:16:15,720 it may not take effect until twenty twenty seven. Even 242 00:16:15,759 --> 00:16:18,679 if they do get it through, well, we may have 243 00:16:18,720 --> 00:16:21,159 an idea by the end of the year too. One 244 00:16:21,200 --> 00:16:25,080 of the issues right now is my guess is AGA 245 00:16:25,440 --> 00:16:29,080 is going to survey their members about this, and Indian 246 00:16:29,080 --> 00:16:33,399 casinos also. This bill passed only a couple of weeks ago, 247 00:16:33,840 --> 00:16:37,200 was signed into law on July fourth. We're recording this 248 00:16:37,279 --> 00:16:44,639 on July fifteenth. That's not enough time. We The rumors 249 00:16:44,679 --> 00:16:49,519 are there's going to be another reconciliation bill later this year, 250 00:16:50,440 --> 00:16:56,240 probably in like the September October time frame. If we 251 00:16:56,639 --> 00:17:00,240 that is probably where we will see something. If we're 252 00:17:00,279 --> 00:17:01,679 going to see something this year. 253 00:17:02,600 --> 00:17:08,359 Speaker 1: Okay, ten ninety ninths sometimes casinos issue ten ninety nine 254 00:17:08,400 --> 00:17:12,680 for various wins. Are these affected by the new law? 255 00:17:13,599 --> 00:17:17,799 Speaker 3: Yes, beginning in twenty twenty six, the ten ninety nine 256 00:17:18,119 --> 00:17:23,039 threshold was increased to two thousand dollars for most ten 257 00:17:23,160 --> 00:17:26,039 ninety nines, including gambling related ten ninety. 258 00:17:25,839 --> 00:17:31,599 Speaker 2: Nine right, So people, So people need to realize that 259 00:17:31,680 --> 00:17:34,880 ten ninety nine is not a W two G. Those 260 00:17:34,920 --> 00:17:39,039 are two different things. And the ten ninety nine threshold 261 00:17:39,200 --> 00:17:44,119 went up, not the W two G. But there's also 262 00:17:44,960 --> 00:17:50,200 that threshold on ten ninety nine is only for the 263 00:17:50,240 --> 00:17:52,519 withholding right, not for the. 264 00:17:54,240 --> 00:17:57,680 Speaker 3: No. The ten ninety nine threshold if for example, you 265 00:17:57,720 --> 00:18:00,319 win a casino contest, that's where you get a a 266 00:18:00,400 --> 00:18:05,599 ten ninety nine. That threshold was increased to two thousand 267 00:18:05,680 --> 00:18:10,279 dollars period and its index for inflation. So beginning in 268 00:18:10,319 --> 00:18:12,799 twenty twenty seven, it will go up from two thousand 269 00:18:12,920 --> 00:18:18,839 to something. Assuming we have some inflation, the W two 270 00:18:18,839 --> 00:18:25,720 G backup with holding threshold was increased to two thousand dollars. However, 271 00:18:26,400 --> 00:18:31,839 the W two G issuance threshold was not increased. Therefore, 272 00:18:31,920 --> 00:18:35,759 if you have a slot win, you pull the handle 273 00:18:35,960 --> 00:18:39,319 so to speak, on a slot machine video poker, and 274 00:18:39,359 --> 00:18:44,279 you hit a thirteen hundred dollar jackpot, you will have 275 00:18:44,319 --> 00:18:47,680 a W two GD issue. If you refuse to give 276 00:18:47,720 --> 00:18:52,599 your social, which is not a great idea, you will 277 00:18:52,799 --> 00:18:56,640 not have back up withholding because it didn't reach the 278 00:18:56,640 --> 00:19:00,480 two thousand dollars threshold. That's how I read the plane 279 00:19:00,720 --> 00:19:05,079 language of the law and the plane language governs. Again, 280 00:19:05,119 --> 00:19:10,319 a technical corrections bill could be in the future to 281 00:19:10,359 --> 00:19:13,359 increase both the two thousand dollars. That would be welcome, 282 00:19:13,440 --> 00:19:19,519 because that twelve hundred dollars slot threshold was I want 283 00:19:19,559 --> 00:19:22,759 to say, it dates to the nineteen seventies or even earlier, 284 00:19:23,960 --> 00:19:25,240 way before my time. 285 00:19:26,079 --> 00:19:29,079 Speaker 2: Yeah, and this idea that you can refuse to give 286 00:19:29,119 --> 00:19:35,839 your social and they'll take withholding out. You know, most 287 00:19:35,839 --> 00:19:39,160 casinos they don't know the law at all and they 288 00:19:39,200 --> 00:19:43,079 will just refuse to pay you, you know. So, yeah, 289 00:19:43,160 --> 00:19:45,279 that's not a good idea to try to tell them no, 290 00:19:45,359 --> 00:19:48,039 I'm not giving you my social on a w twog 291 00:19:48,279 --> 00:19:51,119 unless you're willing to just walk away from the jackpot entirely. 292 00:19:51,720 --> 00:19:54,200 Speaker 1: You also walk away from any credit you have on 293 00:19:54,240 --> 00:19:58,000 the machine before the jackpot hit right, right right. 294 00:19:58,480 --> 00:20:01,880 Speaker 3: The idea that these two threshold are different make no sense, 295 00:20:02,079 --> 00:20:05,000 And as I think, I mentioned a technical corrections bill 296 00:20:05,559 --> 00:20:10,359 for things like this normally happens, but our Congress is 297 00:20:10,400 --> 00:20:11,359 pretty polarized. 298 00:20:12,000 --> 00:20:15,599 Speaker 1: Ctrs usually issued when you have more than ten thousand 299 00:20:16,160 --> 00:20:18,920 in cash transaction in a day. Are they affected at 300 00:20:18,920 --> 00:20:19,559 all by the. 301 00:20:20,640 --> 00:20:24,039 Speaker 3: No ctrs are part of the Bank Secrecy Act? Nothing 302 00:20:24,079 --> 00:20:27,680 in this law changed, Well, there's a couple things that 303 00:20:27,759 --> 00:20:33,160 the word changed, but nothing regarding ctrs. Also, it's not 304 00:20:33,240 --> 00:20:36,200 has nothing to do with wins and losses. They're just 305 00:20:36,440 --> 00:20:39,799 movement of money in and out. So you could have 306 00:20:39,839 --> 00:20:43,279 a losing session and have a CTR it issued if 307 00:20:43,720 --> 00:20:48,119 you know, turning in more than ten thousand dollars okay. 308 00:20:48,160 --> 00:20:52,000 Speaker 1: In nineteen eighty seven, there was a Commissioner versus Grutzinger, 309 00:20:52,920 --> 00:20:56,319 a Supreme Court decision that established gambling income could be 310 00:20:56,400 --> 00:21:00,240 considered a trade or business and thus losses are considered 311 00:21:00,319 --> 00:21:06,000 an expense against revenue. This new law changes that. 312 00:21:07,039 --> 00:21:12,960 Speaker 3: No with all expenses are always allowed for anyone in business, 313 00:21:13,599 --> 00:21:17,319 all ordinary and necessary expenses are allowed up to the 314 00:21:18,960 --> 00:21:23,519 are allowed now for gamblers. What has changed is that 315 00:21:23,960 --> 00:21:29,400 expenses are limited to ninety percent of actual expenses. So 316 00:21:29,519 --> 00:21:35,400 if your expenses total ten thousand dollars ordinary necessary, and 317 00:21:35,599 --> 00:21:38,559 this is after any other limitations. For example, you only 318 00:21:38,559 --> 00:21:41,720 get fifty cents on the dollar for meals, you would 319 00:21:41,720 --> 00:21:46,480 get nine thousand dollars of tax expenses. But your combined 320 00:21:46,720 --> 00:21:51,359 losses and expenses together still can't go higher than ninety 321 00:21:51,440 --> 00:21:52,559 percent of your wins. 322 00:21:52,640 --> 00:21:53,039 Speaker 1: Correct. 323 00:21:53,759 --> 00:21:57,119 Speaker 3: It has nothing to do with wins. It has to 324 00:21:57,160 --> 00:22:02,599 do with actual losses. So suppose we have a professional 325 00:22:02,640 --> 00:22:06,480 gambler has one hundred thousand of gambling wins, one hundred 326 00:22:06,559 --> 00:22:10,640 thousand of gambling losses, and business expenses. He will report 327 00:22:10,720 --> 00:22:14,119 one hundred thousand of wins and ninety thousand of losses 328 00:22:14,160 --> 00:22:17,759 and business expenses. Let's take another professional gambler who has 329 00:22:17,759 --> 00:22:21,559 one hundred thousand of wins and twenty thousand of losses 330 00:22:21,559 --> 00:22:25,319 and business expenses. They'll report one hundred thousand of wins 331 00:22:25,720 --> 00:22:30,839 and eighteen thousand of losses and business expenses. Let's say 332 00:22:30,880 --> 00:22:35,200 we have a another professional gambler who has one hundred 333 00:22:35,200 --> 00:22:39,480 thousand of wins and one hundred and ten thousand of 334 00:22:40,000 --> 00:22:44,720 losses and business expenses. He will lose eleven thousand dollars 335 00:22:45,359 --> 00:22:48,559 of losses and business expenses because they're limited to ninety 336 00:22:48,599 --> 00:22:51,799 percent of actual they're also limited by the way to 337 00:22:51,839 --> 00:22:54,759 the amount of wins, but in this case they'll end 338 00:22:54,799 --> 00:22:58,400 up at ninety nine thousand dollars and he will pay 339 00:22:58,480 --> 00:23:01,319 tax on one thousand dollars. Is a phantom income. 340 00:23:02,000 --> 00:23:06,279 Speaker 1: We've talked about relatively small amounts of W twogs. Big 341 00:23:06,319 --> 00:23:09,240 players can easily get five or ten million dollars a 342 00:23:09,400 --> 00:23:11,440 W two g's, or have in the past. I've done 343 00:23:11,440 --> 00:23:13,799 that many times when they've played in high limit rooms. 344 00:23:14,720 --> 00:23:19,480 This law seems to be the death of high limit rooms. 345 00:23:20,200 --> 00:23:23,000 Players might do it one year and again and figure 346 00:23:23,000 --> 00:23:25,799 out they have this horrendous tax bill. They had no 347 00:23:25,920 --> 00:23:30,519 idea that it was happening, and then you just can't 348 00:23:30,519 --> 00:23:32,880 play that way anymore. You can't play twenty five dollars 349 00:23:32,920 --> 00:23:36,160 machines and get all of the W twogs or one 350 00:23:36,200 --> 00:23:38,480 hundred dollars slot machines. You just get tons of W 351 00:23:38,559 --> 00:23:42,960 two g's and people have to stop playing those Is 352 00:23:42,960 --> 00:23:45,799 that fair? Mostly it is fair. 353 00:23:47,440 --> 00:23:53,079 Speaker 3: The issue again is not w two g it's session results. Now, 354 00:23:53,519 --> 00:23:56,519 first I'm going to point out the obvious. Most amateur 355 00:23:56,559 --> 00:23:59,920 gamblers don't keep session monks, and so they're gonna be 356 00:24:00,000 --> 00:24:03,480 Why I'm cited by this, it's you know, somebody who 357 00:24:03,640 --> 00:24:07,279 goes in again, A losing gambler is not impact so 358 00:24:07,319 --> 00:24:10,799 to a certain extent. Mean, if we think about it, 359 00:24:10,880 --> 00:24:14,079 the high high limit rooms, I would guess, just like 360 00:24:14,160 --> 00:24:16,559 any other form of gambling, at least ninety percent of 361 00:24:16,559 --> 00:24:20,559 the people walking in there lose big and therefore those 362 00:24:20,640 --> 00:24:24,200 people are not going to be impact. You still get, 363 00:24:24,519 --> 00:24:27,759 you know, ninety percent of your gambling losses, and if 364 00:24:27,799 --> 00:24:30,559 those gambling losses exceed one hundred and eleven percent of 365 00:24:30,559 --> 00:24:36,480 your wins, nothing has changed. But as far as professional 366 00:24:36,519 --> 00:24:39,680 gamblers playing high limit rooms, absolutely it's going to have 367 00:24:39,759 --> 00:24:45,079 an impact. Anything that has large dollars low margin is 368 00:24:45,200 --> 00:24:46,359 hit under this spill. 369 00:24:47,279 --> 00:24:51,480 Speaker 2: Yeah, and sports betters are even more impacted than video 370 00:24:51,519 --> 00:24:56,039 poker players. It's easy to have twenty fifty million dollars 371 00:24:56,079 --> 00:25:00,960 worth of turnover in the course of a year, and 372 00:25:01,759 --> 00:25:06,839 you know, if if your return on investment is you know, 373 00:25:06,960 --> 00:25:11,000 two or three percent. You know, you can end up 374 00:25:11,039 --> 00:25:13,799 owing millions of dollars in taxes on. 375 00:25:14,440 --> 00:25:16,319 Speaker 3: You know, not that much income. 376 00:25:17,200 --> 00:25:17,759 Speaker 1: I agree. 377 00:25:17,799 --> 00:25:21,880 Speaker 3: I think sports betting especially is really going to be hit. 378 00:25:22,920 --> 00:25:25,839 Another key question, which again we don't know the answer 379 00:25:25,839 --> 00:25:30,519 to yet, is how will these sports betting companies here 380 00:25:30,559 --> 00:25:34,519 I'm considering companies that really only do sports bank DraftKings, 381 00:25:34,559 --> 00:25:38,480 FanDuel look at this bill. They do not want professional 382 00:25:38,480 --> 00:25:42,799 sports banks. They have limited people right and left. If 383 00:25:42,839 --> 00:25:46,160 they discover that Russ Fox is a professional sports better 384 00:25:46,240 --> 00:25:50,119 and uses draft Gings or FanDuel, I will be limited 385 00:25:50,160 --> 00:25:54,279 to basically two cent bets. But what are they going 386 00:25:54,359 --> 00:25:58,160 to do because it still hurts their volume, it hurts 387 00:25:58,200 --> 00:26:02,680 the amount they're going to collect, and we don't Again, 388 00:26:02,799 --> 00:26:05,480 the law is too new for us to know the answer. 389 00:26:06,079 --> 00:26:10,880 I suspect they're probably very neutral on this bill because 390 00:26:10,920 --> 00:26:14,880 they do want to get rid of professionals professional sports betters, 391 00:26:15,559 --> 00:26:18,599 but they don't like the idea of what's going to 392 00:26:18,599 --> 00:26:22,920 potentially happen long term. That's a guess. I have no 393 00:26:23,440 --> 00:26:26,079 you know, I've not spoken to anyone at either company. 394 00:26:26,440 --> 00:26:29,440 I have no idea how they feel I've not seen 395 00:26:29,480 --> 00:26:33,400 any public statements from them, but I assume sooner or 396 00:26:33,480 --> 00:26:35,279 later they're going to be forced to make one. 397 00:26:35,519 --> 00:26:38,480 Speaker 2: Well, I think they're a little short sighted in that 398 00:26:39,000 --> 00:26:43,319 those are publicly traded companies, which means if suddenly their 399 00:26:43,440 --> 00:26:48,200 handle goes down, they have to justify that to their 400 00:26:48,920 --> 00:26:52,480 to their shareholders and to say, oh, well, we only 401 00:26:52,519 --> 00:26:56,000 got rid of the bad money that was coming in. 402 00:26:56,119 --> 00:26:58,240 I don't know that shareholders are going to buy that. 403 00:26:58,799 --> 00:27:01,880 I also think they're very afraid that it's going to 404 00:27:02,000 --> 00:27:07,400 drive more and more people off shore. And even the 405 00:27:07,519 --> 00:27:12,559 recreational gamblers are going to start hearing even though the 406 00:27:12,599 --> 00:27:16,880 tax thing doesn't affect them, but they're going to hear 407 00:27:17,000 --> 00:27:20,880 that their taxes are going to be worse, and you know, 408 00:27:21,119 --> 00:27:25,319 and and take their action off shore. But I mean, 409 00:27:25,359 --> 00:27:27,720 as you say, we don't know what's going to happen there. 410 00:27:27,759 --> 00:27:33,359 And the sports books are much more concerned with getting 411 00:27:33,440 --> 00:27:37,200 Eye casino. They make so much more on the internet 412 00:27:37,240 --> 00:27:40,920 casino gaming than they do on the sports betting, So 413 00:27:41,720 --> 00:27:44,920 if they think there's something in their calculation that might 414 00:27:44,960 --> 00:27:49,359 affect Eye Casino, then you know that that may have 415 00:27:49,480 --> 00:27:53,599 something to do with which way they try to push 416 00:27:53,720 --> 00:27:56,000 it's just frankly too orly enough. 417 00:27:56,839 --> 00:28:00,920 Speaker 1: Yeah. Is there any distinction between US citizens and non 418 00:28:01,079 --> 00:28:02,640 US citizens. 419 00:28:03,519 --> 00:28:10,799 Speaker 3: With respect to this bill? Yes, there is. Non US 420 00:28:10,839 --> 00:28:15,319 citizens who are permanent residents are taxed just like US citizens. 421 00:28:15,920 --> 00:28:20,400 Those individuals are in the same exact boat as you 422 00:28:20,480 --> 00:28:26,000 and I. However, non resident aliens are generally not taxed 423 00:28:26,039 --> 00:28:29,160 as US citizens unless they meet what is called the 424 00:28:29,160 --> 00:28:35,720 substantial presence test, and also so a non resident alien 425 00:28:35,799 --> 00:28:42,720 is not impacted general. Finally, only non resident alien professional 426 00:28:42,759 --> 00:28:47,720 gamblers conducting a business in the US, those individuals, of 427 00:28:47,759 --> 00:28:52,480 which there might be two in the entire trait, are impacted. 428 00:28:52,920 --> 00:28:56,880 But in general, a non resident like someone who came 429 00:28:56,920 --> 00:28:59,519 to the World Series of Poker, playing at the World 430 00:28:59,519 --> 00:29:02,759 Series Poker, then going home, he or she will not 431 00:29:02,880 --> 00:29:04,160 be impacted. 432 00:29:04,240 --> 00:29:06,839 Speaker 2: So he doesn't owe tax on the money he earns 433 00:29:06,920 --> 00:29:11,279 at the World Series, assuming he's in a country with 434 00:29:11,319 --> 00:29:12,519 a tax treaty. 435 00:29:13,200 --> 00:29:15,680 Speaker 3: If he's in it, like he's from the United Kingdom, 436 00:29:15,960 --> 00:29:20,240 comes here for two months, plays, goes home. The UK 437 00:29:20,480 --> 00:29:24,359 US tax treaty says there's no withholding on gambling. He 438 00:29:24,440 --> 00:29:28,880 gets all of his money, no impact gambling wins and losses, 439 00:29:29,440 --> 00:29:35,880 don't affect him not impacted. Under the US Code, which 440 00:29:35,920 --> 00:29:38,799 is law, and the US UK tax treaty and treaties 441 00:29:38,799 --> 00:29:43,039 are considered law. An individual from a tax treaty country 442 00:29:43,079 --> 00:29:48,920 faces no withholding. There's a list of them. They're mostly 443 00:29:49,079 --> 00:29:53,480 in Western Europe, but it's not all countries. If you're 444 00:29:53,519 --> 00:29:57,359 from the wrong country, for example Switzerland, you have thirty 445 00:29:57,400 --> 00:30:01,119 percent withholding on anything that generates s a W two G. 446 00:30:02,160 --> 00:30:06,279 Those individuals get a Form ten forty two S. Now, consider, 447 00:30:06,319 --> 00:30:10,839 for example, somebody from a tax cheaty country who earns 448 00:30:10,880 --> 00:30:15,039 a W two G poker, slots, video poker, whatever it is. 449 00:30:15,640 --> 00:30:17,799 They still get a tax for them. They get a 450 00:30:17,839 --> 00:30:21,119 Form ten forty two S, but it will show zero 451 00:30:21,200 --> 00:30:25,359 percent withholding, assuming they have what is called an IT 452 00:30:25,559 --> 00:30:31,319 in an individual tax pay identification number. Some casinos in 453 00:30:31,359 --> 00:30:35,079 the US issue them, some don't. If you go to 454 00:30:35,119 --> 00:30:37,319 the wrong casino and you don't have an IT in, 455 00:30:37,759 --> 00:30:40,440 you will still have money with hell, but you can 456 00:30:40,480 --> 00:30:41,160 get it back. 457 00:30:41,960 --> 00:30:45,000 Speaker 2: So what about I know that if you are an 458 00:30:45,039 --> 00:30:49,759 American and you move to another country, say Canada or 459 00:30:49,799 --> 00:30:53,599 the UK, you still owe tax on the money you 460 00:30:53,720 --> 00:30:57,920 earn in the United States. Or if you're not living 461 00:30:57,960 --> 00:31:00,720 there a certain like I don't know, eleven months of 462 00:31:00,720 --> 00:31:03,200 the year or something. There's some amount of time you're 463 00:31:03,240 --> 00:31:06,799 allowed to visit. But how hard is it to actually 464 00:31:06,880 --> 00:31:11,079 renounce your citizenship and become a citizen of Canada or 465 00:31:11,279 --> 00:31:15,119 UK and not have the tax situation. 466 00:31:16,000 --> 00:31:18,240 Speaker 3: Well, there are a couple. There are actually two things 467 00:31:18,279 --> 00:31:22,839 in your question. First, and a US citizen owes tax 468 00:31:22,920 --> 00:31:27,240 on the worldwide income. A US citizen living in Canada 469 00:31:27,319 --> 00:31:31,799 or the UK has to report everything. Now, some things 470 00:31:31,839 --> 00:31:36,720 can be excluded via something called the foreign earned income exclusion. 471 00:31:36,960 --> 00:31:41,799 They are also foreign tax credits. Generally, a US citizen 472 00:31:41,880 --> 00:31:46,960 living abroad earning an income from wages will not owe 473 00:31:47,160 --> 00:31:51,079 US tax if they're in a high tax country, which 474 00:31:51,160 --> 00:31:56,119 definitely Canada is, UK is as far as wages. If 475 00:31:56,119 --> 00:31:59,039 they're in a low tax country, they may owe some tax. 476 00:32:00,000 --> 00:32:03,359 There are some countries, for example, I always get this wrong, 477 00:32:03,440 --> 00:32:06,960 the Baltic countries Lafya, Lithuania, Estonia. One of them has 478 00:32:07,000 --> 00:32:10,799 I get ten or twelve percent income tax rate, while 479 00:32:10,839 --> 00:32:14,119 an American working in one of those countries is going 480 00:32:14,160 --> 00:32:16,960 to owe US tax because the US tax rate will 481 00:32:17,000 --> 00:32:24,039 generally be higher. Renouncing citizenship is a legal process. It's involved. 482 00:32:24,480 --> 00:32:28,319 It is something that somebody, if anyone wanted to do that, 483 00:32:28,359 --> 00:32:32,960 they needed to consult an attorney. Not an attorney. There 484 00:32:33,039 --> 00:32:36,720 is a form you file if you renounce citizenship because 485 00:32:36,720 --> 00:32:40,880 the US has an exit tax. If your assets are 486 00:32:40,920 --> 00:32:43,000 over a certain amount or your income is over a 487 00:32:43,039 --> 00:32:47,400 certain amount, you generally have to continue filing tax returns 488 00:32:47,400 --> 00:32:50,839 for ten years, and you may owe US tax for 489 00:32:51,039 --> 00:32:56,400 additional ten years. If your income isn't that high or 490 00:32:56,440 --> 00:32:59,480 your assets are not that high, you file the form. 491 00:33:00,000 --> 00:33:02,319 By the way, this form has filed under penalty of perjury. 492 00:33:03,279 --> 00:33:06,160 Somebody got in very deep trouble for claiming he was 493 00:33:06,200 --> 00:33:09,720 worth about half a million dollars when he was worth 494 00:33:09,720 --> 00:33:14,440 sixteen billion. That doesn't work, well, don't I do not? 495 00:33:15,200 --> 00:33:21,799 It was around herror, Yeah. Uh. He ended up paying 496 00:33:21,839 --> 00:33:24,799 the exit attacks along with penalties and interest in lieu 497 00:33:24,839 --> 00:33:28,039 of jail tie he had made a flight from a 498 00:33:28,039 --> 00:33:30,799 country which didn't have an extradition treaty with the US 499 00:33:30,920 --> 00:33:31,640 to one that did. 500 00:33:32,279 --> 00:33:33,079 Speaker 1: Oops. 501 00:33:33,440 --> 00:33:38,039 Speaker 3: But I have filed this form twice for clients. As 502 00:33:38,039 --> 00:33:41,319 long as you do it, and you're you know, doing it, 503 00:33:41,400 --> 00:33:45,400 you know accurately, it's and in both cases, both clients 504 00:33:45,400 --> 00:33:48,880 were what are called accidental Americans. They were born in 505 00:33:48,920 --> 00:33:53,000 the US, they had citizenship in another country. They were 506 00:33:53,039 --> 00:33:57,559 both average individuals, you know, middle class earning wages. You know, 507 00:33:57,640 --> 00:34:00,359 they didn't have billions in assets, and they didn't make 508 00:34:00,440 --> 00:34:04,480 you know, tremendous dollar amounts of income where they would 509 00:34:04,519 --> 00:34:08,320 be subject to the exit tax. Anybody who is subject 510 00:34:08,400 --> 00:34:11,440 to the exit tax, you know, I would immediately refer 511 00:34:11,519 --> 00:34:12,840 to an immigration attorney. 512 00:34:13,280 --> 00:34:18,519 Speaker 1: Are there any company structures such as sole proprietorships, partnerships, llc, 513 00:34:18,679 --> 00:34:22,880 et cetera, that would receive more favorable treatment under the 514 00:34:22,920 --> 00:34:28,159 new law prepared to another company structure. 515 00:34:28,639 --> 00:34:34,079 Speaker 3: Not related to gambling, however, for certain other business activities. Potentially, yes, 516 00:34:35,039 --> 00:34:38,880 I expect a slight increase in sea corporations in the future. 517 00:34:39,679 --> 00:34:42,880 Has nothing to do with gambling. But my initial reading 518 00:34:43,320 --> 00:34:48,440 was there are some tax advantages potentially for sea corporations 519 00:34:49,440 --> 00:34:50,119 in the future. 520 00:34:51,039 --> 00:34:54,800 Speaker 1: Early in this administration, maybe still, there was a Department 521 00:34:54,800 --> 00:34:59,079 of Government Efficiency which went around and, among other things, 522 00:34:59,119 --> 00:35:03,800 fired a lot of federal employees. Presumably this includes a 523 00:35:03,800 --> 00:35:08,360 lot of IRS auditors. Does this imply the chances of 524 00:35:08,400 --> 00:35:11,719 having your taxes audited for your twenty twenty six return 525 00:35:12,440 --> 00:35:16,119 are lower than they would be for your twenty twenty 526 00:35:16,119 --> 00:35:16,760 four return. 527 00:35:17,719 --> 00:35:21,480 Speaker 3: Well, I would say one thing to first say is 528 00:35:21,599 --> 00:35:26,719 audits don't happen when you file your return. Let's assume 529 00:35:26,800 --> 00:35:30,960 you file today on extension your twenty twenty four return 530 00:35:31,880 --> 00:35:35,840 that returns file today is in middle of July. An 531 00:35:35,880 --> 00:35:40,639 audit would happen between the middle of twenty twenty six 532 00:35:41,159 --> 00:35:46,280 to the middle of twenty twenty seven. Audits happen aways 533 00:35:46,800 --> 00:35:50,559 out from the date you file your tax return, So 534 00:35:51,039 --> 00:35:53,800 we don't know what's going to happen for twenty twenty 535 00:35:53,840 --> 00:35:57,039 six returns because that's we're dealing with stuff that would 536 00:35:57,039 --> 00:36:00,679 happen in twenty seven to twenty eight, and nobody knows 537 00:36:00,679 --> 00:36:04,840 what the IRIS workforce is going to be then. But generally, yes, 538 00:36:05,000 --> 00:36:08,480 I expect audits to go down because there are just 539 00:36:08,599 --> 00:36:11,320 fewer people the IRS. The IRIS is lost in various 540 00:36:11,360 --> 00:36:15,599 departments between ten and thirty percent of their staff. Now, 541 00:36:15,920 --> 00:36:20,079 that is going to also be not good for tax administration, 542 00:36:21,599 --> 00:36:25,039 and there needs to be some adds. It helps with 543 00:36:25,159 --> 00:36:27,679 tax compliance. I hate to say that, but you know, 544 00:36:27,679 --> 00:36:29,960 it'd be nice if everybody told the truth on their 545 00:36:30,000 --> 00:36:34,679 tax returns. But I'm not naive. There was something that 546 00:36:34,760 --> 00:36:38,840 came out this morning where an individual who's a former 547 00:36:39,800 --> 00:36:43,480 person very high up in the IRIS expects another ten 548 00:36:43,519 --> 00:36:48,280 to forty percent of IRIS employees to leave this year. Wow, 549 00:36:48,880 --> 00:36:54,039 that's a lot. Now, the IRIS computer system is ancient. 550 00:36:54,679 --> 00:36:59,119 It dates to nineteen fifty nine. You've heard me correctly, 551 00:36:59,760 --> 00:37:03,199 before I was born, and you know I'm going to 552 00:37:03,239 --> 00:37:05,920 be aligible for Social Security in a few years. So 553 00:37:06,199 --> 00:37:10,360 it's old. Think punch carts. By the way, if anybody 554 00:37:10,440 --> 00:37:13,480 listening is a COBOYL programmer and wants a job, the 555 00:37:13,519 --> 00:37:16,519 IRIS will hire you right now. You have to go 556 00:37:16,519 --> 00:37:20,440 to Martinsburg, West Virginia. Don't I have no idea where 557 00:37:20,480 --> 00:37:23,239 that is, except it's in West Virginia. But that's where 558 00:37:23,239 --> 00:37:28,239 the main IRIS computing center is. However, one of the 559 00:37:28,280 --> 00:37:31,880 things that happens the IRS sends out a lot of 560 00:37:31,960 --> 00:37:35,800 automated under reporting unit notices. These are where the IRIS 561 00:37:35,880 --> 00:37:39,440 match things up. For example, you have one thousand dollars 562 00:37:39,440 --> 00:37:41,440 of interest income from a bank and you don't put 563 00:37:41,480 --> 00:37:43,679 it on your tax return. The IRIS is very good 564 00:37:43,679 --> 00:37:46,480 about matching those things, and you get an automated under 565 00:37:46,480 --> 00:37:49,280 reporting unit notice saying you don't think you included this. 566 00:37:49,960 --> 00:37:52,760 Sometimes you have and the IRIS computer just doesn't see it. 567 00:37:53,719 --> 00:37:56,360 You type Bank of America and you accidentally made a 568 00:37:56,400 --> 00:37:59,199 type up and so the computer didn't match it. You 569 00:37:59,280 --> 00:38:03,599 just pointed out out. I expect a lot more of 570 00:38:03,639 --> 00:38:06,960 these notices in the future. The IRS is going to 571 00:38:07,039 --> 00:38:10,400 see a lot of w twogs. People are going to 572 00:38:10,599 --> 00:38:14,679 use a session method not attached disclosure statements, and the 573 00:38:14,719 --> 00:38:17,079 IRS is going to be sending out a lot of 574 00:38:17,119 --> 00:38:19,920 these notices, and there's going to be fewer staff to 575 00:38:20,000 --> 00:38:23,800 deal with the responses. That's going to be an issue. 576 00:38:24,320 --> 00:38:28,559 Speaker 2: I mean, isn't somebody take a recreational gambler that gambles 577 00:38:28,559 --> 00:38:33,599 a lot, you know, aren't they reporting that wrong? If 578 00:38:33,719 --> 00:38:37,960 let's say that they had fifty thousand in w twogs 579 00:38:38,079 --> 00:38:41,079 and they lost a total of seventy thousand or whatever, 580 00:38:41,719 --> 00:38:44,440 And what you're saying is you put fifty thousand in 581 00:38:44,519 --> 00:38:49,519 the winds and seventy thousand and go offset it with 582 00:38:49,840 --> 00:38:52,159 the losses ninety percent of seventy thousand. 583 00:38:53,119 --> 00:38:57,199 Speaker 4: But aren't they actually because those people some days won, 584 00:38:58,199 --> 00:39:00,840 so they actually had more than fIF fifty thousand in 585 00:39:00,920 --> 00:39:03,360 wins than just the w twogs. 586 00:39:03,920 --> 00:39:05,920 Speaker 3: So shouldn't they be putting. 587 00:39:05,840 --> 00:39:08,760 Speaker 2: I had eighty thousand in win and one hundred and 588 00:39:08,840 --> 00:39:09,880 twenty thousand. 589 00:39:09,679 --> 00:39:13,840 Speaker 3: Lossy, it's possible they have more. It's also possible they 590 00:39:13,840 --> 00:39:17,960 have less. Okay, your w twogs do not mean that's 591 00:39:18,000 --> 00:39:21,000 your session total of wings. No, but on some days 592 00:39:21,039 --> 00:39:21,599 people win. 593 00:39:21,920 --> 00:39:24,280 Speaker 2: I mean, if they're a spot player, they you know. 594 00:39:24,239 --> 00:39:27,679 Speaker 3: Oh absolutely. But here's the thing. If they have fifty 595 00:39:27,719 --> 00:39:29,920 thousand of W two g's, what's the total of their 596 00:39:30,000 --> 00:39:33,360 session wins. If it's more than fifty thousand, yes, they 597 00:39:33,400 --> 00:39:37,199 need to add to their wins another twenty thousand. Okay, 598 00:39:37,519 --> 00:39:40,840 if it's less, they can subtract that as an adjustment 599 00:39:40,880 --> 00:39:44,639 to income. It'll be both ways. There are people who 600 00:39:44,679 --> 00:39:47,559 have fifty thousand of w twog's one hundred and fifty 601 00:39:47,639 --> 00:39:50,440 thousand of gambling wings, and there are also people with 602 00:39:50,519 --> 00:39:54,239 fifty thousand of w twogs with five thousand of gambling wins. 603 00:39:54,480 --> 00:39:59,440 Both are possible. Yeah, in many cases people will just okay, 604 00:39:59,480 --> 00:40:02,679 I have fifty thousand of gambling of w twogs, I 605 00:40:02,760 --> 00:40:05,960 lost money. I lost more than one hundred and eleven percent, 606 00:40:06,280 --> 00:40:08,920 So I'm just going to put down fifty thousand of 607 00:40:09,000 --> 00:40:13,239 tax gambling losses. I'm going to be fine. Is that 608 00:40:13,280 --> 00:40:18,960 technically correct? No? Is it accurate or change the tax? 609 00:40:19,239 --> 00:40:22,599 Probably not, but it could in some circumstance changes their 610 00:40:22,599 --> 00:40:25,880 adjusted gross income? Right, yes, but it may or may 611 00:40:25,920 --> 00:40:28,239 not change their tax. It all depends. 612 00:40:28,840 --> 00:40:34,360 Speaker 1: I would guess this law is going to increase the 613 00:40:34,599 --> 00:40:40,679 dishonest reporting among a large number of professional gamblers. Now, 614 00:40:40,800 --> 00:40:44,719 obviously dishonest reporting is something you're very much against. But 615 00:40:44,920 --> 00:40:48,480 would you suspect that I'm right in this? Yes? 616 00:40:49,239 --> 00:40:54,159 Speaker 3: I'm not naive. People are I mean, a gambler who 617 00:40:54,199 --> 00:40:57,880 loses is and they're going to a lot of people 618 00:40:58,039 --> 00:41:02,800 are going to play auditor went. I can never advise 619 00:41:02,880 --> 00:41:09,519 such actions. I'm licensed, and I always have to suggest 620 00:41:09,559 --> 00:41:12,840 compliance with our tax laws. But I'm not naive. 621 00:41:13,760 --> 00:41:16,679 Speaker 1: So Russell Fox, thank you very much. If any of 622 00:41:16,679 --> 00:41:18,920 our listeners wish to get a hold of you for 623 00:41:19,559 --> 00:41:22,079 tax or other consulting reasons, how would they do that? 624 00:41:22,880 --> 00:41:27,559 Speaker 3: Eisi way is to send an email to rcfoxat Claytontax 625 00:41:27,719 --> 00:41:29,119 dot com. 626 00:41:30,599 --> 00:41:31,920 Speaker 1: Be advised that. 627 00:41:32,239 --> 00:41:35,280 Speaker 3: If you're interested in us preparing your twenty twenty four 628 00:41:35,440 --> 00:41:39,639 tax return, that would be on extension, probably not doable. 629 00:41:40,119 --> 00:41:44,679 We're close to at capacity for this calendar year, but 630 00:41:44,840 --> 00:41:47,960 for next year would probably be still doable. That's twenty 631 00:41:48,079 --> 00:41:51,679 twenty five returns a year. We're in filed in twenty six. 632 00:41:52,440 --> 00:41:53,280 Speaker 1: Thank you for much. 633 00:41:53,679 --> 00:41:56,559 Speaker 2: We'll put a link for your link to your website 634 00:41:56,559 --> 00:41:59,000 into your email in the show notes. 635 00:42:00,280 --> 00:42:04,559 Speaker 1: Is it also true, Russell Fox, that if this tax 636 00:42:04,639 --> 00:42:08,800 law changes in that you'll likely report that in your 637 00:42:08,800 --> 00:42:11,360 website taxable talk dot com. 638 00:42:11,760 --> 00:42:16,360 Speaker 3: Oh yes, if there is a if, for example, something 639 00:42:17,119 --> 00:42:21,599 the law gets changed, I will absolutely report it. I'm 640 00:42:21,679 --> 00:42:25,800 still digesting all the provisions of this bill. The bill 641 00:42:25,880 --> 00:42:30,599 itself is I have it up. It is three hundred 642 00:42:30,599 --> 00:42:33,800 and thirty pages of fine print. I thought it was 643 00:42:33,840 --> 00:42:37,920 over nine hundred pages. It is showing at well, it's 644 00:42:37,960 --> 00:42:42,079 frunk it in the format it's probably nine hundred pages 645 00:42:42,480 --> 00:42:46,239 at about an eleven font as printed by the US 646 00:42:46,360 --> 00:42:50,599 Government Publishing Office. It's in like a four or five font. 647 00:42:50,960 --> 00:42:54,960 Speaker 1: Oh geez, I mean it's tiny, all righty, Thank you 648 00:42:55,039 --> 00:42:58,800 very much, Russell Fox. Thank you, Richard. Go out and 649 00:42:58,880 --> 00:43:01,159 hit lots of wild flushes, everybody, but do it this 650 00:43:01,280 --> 00:43:04,039 year and not next. Thank you. Goodbye,