US Gambling withholding tax refund - Expert Income Tax help on cross Border tax and immigration and divorce and RRSP and IRA an

On 06/08/2010 9:16 AM, xxxxxxxxxxxxxxx wrote:

Hi David, You do this?

I have a 1042-S form with a withholding of $543.27 US. Can you get it back for me?

What is your fee? How long will it take?
Thanks, xxxxxxxxxxxxx

Tax Court Accepts IRS Method for Determining Gambling Wins and Losses


December 29, 2009

The Tax Court held in a memorandum decision released Monday that taxpayers who were casual gamblers recognized wins or losses when they redeemed their tokens and that they could not net their wins and losses across the year (Shollenberger, TC Memo 2009-306).

In this decision, the court accepted the IRS’ methodology for determining wagering gains and losses, which the Office of Chief Counsel put forth in a legal memorandum in 2008 (AM 2008-011).

The taxpayers in the case were a married couple who gambled occasionally at a casino in the small town of Charles Town, W.Va. On March 29, 2005, the husband hit a $2,000 jackpot at a dollar slot machine. The couple continued gambling and lost $400 from the jackpot; they left the casino that day with $1,600 in winnings. They did not report any gambling income on their tax return for 2005, and the IRS issued a deficiency notice for $2,000 in unreported gambling winnings.

IRC § 165(d) states that “losses from wagering transactions shall be allowed only to the extent of the gains from such transactions” but does not provide a technical definition of the terms “gains” and “losses.” As AM 2008-011 explains, the term “transactions” in section 165(d) could mean every single play in a game of chance or every wager made. That interpretation would require a taxpayer to calculate the gain or loss on every transaction separately and treat every play or wager as a taxable event and also to trace and recompute the basis through all transactions to calculate the result of each play or wager.

Because that method would be “unduly burdensome,” the IRS legal memo allows a casual gambler to recognize a wagering gain or loss at the time he or she redeems tokens.

At trial, the IRS conceded that under that method, the taxpayers should have reported $1,100 in gambling winnings rather than the $2,000 in the deficiency notice. According to the court, the lesser amount would be calculated as follows: $2,000 in jackpot winnings minus $500 in wagering money originally brought into the casino by the taxpayers minus the $400 lost by the taxpayers after the jackpot that day.

The taxpayers argued that they should be allowed to offset their gambling winnings with $2,264 of other gambling losses that they claimed to have incurred in 2005. Because section 165(d) uses the term “transactions,” the court held that the taxpayers could not net their gains and losses throughout the year. Instead, the court accepted the IRS’ treatment of transactions as occurring when the gambler cashes in his or her tokens at the end of play and held the taxpayers to have $1,100 of unreported gross income for the year.

According to the court, to allow the taxpayers to net gains and losses throughout the year would defeat the purpose of IRC § 63, under which losses of casual gamblers are allowable only as itemized deductions.

Today,  I realized I have some 500 unanswered questions.  I do not know how they get to be that many.  I had them down to a very few at the end of December but have been swamped  since and have hardly answered any even though my intention is to answer two free strange questions a day..
If your question was not answered fully or you wish to go further, I am available for individual consultations by phone or email or in person for $450 per professional hour. 

If you 'really' only have a single question requiring a 'couple' of minutes, you can try phoning me for free as part of the following.

For a quick free question

You might try calling me on  Fred Snyder's radio program "ITS YOUR MONEY" for an answer. 

Fred Snyder's  "IT'S YOUR MONEY" radio show. on CISL,  650 AM on the dial in Vancouver from 9 to 11:00 AM every Sunday  (604) 280-0650 or (877) 280-0650 - You can listen live from anywhere in the world at from anywhere in the world. click on the button in the top left hand corner.

This is a live interactive program dealing mostly with Investment vehicles but we welcome tax questions and even a bit of immigration.  We try and limit our calls to three or four minutes however, so make your question succinct and get that answer.  If there is a follow up question, please call back.

The following was my April 27, 2008 version of a "too many questions email" when i gave up on ever getting to about 1,000 emails.    The problem is that I keep on putting things aside that I want to answer but just do not get to.  I have, by the way, answered over 600 unsolicited emails during this time.



david ingram replies:

This email has NOT been read because of the sheer number received each day.  Two unidentified emails are picked to be answered each day.   The rest receive this email.  Contact information is provided further on.  As I am amending / updating this automatic reply, there are over 400 today.   I have cleaned out over 45,000 messages from my spam box and over 14,000 that I actually looked at and deleted. Sometimes, you will receive this a loooonnnnggg time laterThis is because I put it aside to answer and finally gave up at ever getting at two or three hundred of them.

In general, I pick out two or three or four random questions to answer a day.  Unfortunately, I am sorry that I cannot reply to your question at the moment because you do not show as a  client. If I am incorrect and you are a client with a new email address, etc., please resend your question or inquiry with YOUR NAME (i.e. John Smith) and the words "PAYING CUSTOMER" in the subject matter.  Please indicate when you saw me or consulted me in the last six months and what name the bill would have been under.  I am also going to limit my free follow up questions to two from now on.

That does NOT mean I am going to charge automatically for the question.  A simple yes or no question is never charged for.  However, it does identify your question as being a priority and should stop it from being spammed out or automatically sent this rejection letter. 

At the moment, I am limiting my free replies to two to four per day (I get up to 50 questions) from non-clients. I am just too busy to answer many questions and am limiting myself to 2 a day except for my regular paying customers whom I do my damnedest to answer the same day.  And, if I have already answered one of yours free in the last six months, it is unlikely that the system will let you through with another free one now. And, if i have not answered a client's question within 48 hours, it is unlikely that it survived the filters and you should resend it or phone (604) 980-0321 to point out that you are a client and that this is one of your two follow-up questions. 

If you are not an existing client and decide to retain me to answer your question(s), please be advised that I have a minimum charge of $450 Canadian (plus GST if in Canada - as shown in the suggested price guidelines in RED below.  Please call Gillian Bryan or Peter Ingram at (604) 980-0321 to set up a phone consultation time. 

They will ask you to email your question again (likely with more detail since you are paying for it) to myself [email protected] and either Peter at [email protected] or Gillian at [email protected] and they will set up a phone consultation time for us to talk.

I am, however, adding your name to our Q & A list and another question may answer yours. AND, I have answered over 8,000 questions at or  (see the archives) and you should be / might be able to find your answer by going there or  more specifically, to
(To be removed from that list, reply to [email protected] with 'Please Remove' in the Subject)

However, if you can not find your answer at the site, answers to this and other similar  questions can be obtained 'FREE' on Air on that First Sunday of every month on CISL as above or most Sunday Evenings and always on the first Sunday Evening of each month
And as I said, on the FIRST Sunday of each month, I will guest with Fred Snyder from 9 AM to 11:00 AM on CISLE  650 on the AM Dial.  This is also a live phone in show and we take calls.
Callers to the Shows can also come out on Thursdays at noon or 7PM at night to one of our Fred's free seminars at his office at 1764 West 7th in Vancouver.. Each one of the 2 1/2 hour seminars devotes at least 20 minutes to mortgaging and making all interest deductible

Every Thursday noon and evening, Fred Snyder of Dundee Wealth Management conducts one of 23 different financial seminars at his office

Time:    7:00 to 9:30 PM
Date:    Every Thursday evening
Place    1764 West Seventh
             Vancouver (corner of Burrard)

Phone (604) 731-8900 to register and there is usually a Noon hour seminar as well.   At the noon hour seminar, Fred even provides Sandwiches and coffee.

No cost - no obligation

Topics always cover mortgage interest as a deduction

other topics - getting the mortgage, estate planning, critical care insurance, income taxation (3 nights), differences between stocks and bonds, and usually the most innovative HELOC mortgage offered in Canada from Manulife Bank as presented by Stuart Rodger  of Manulife (604) 351-6133,
Those on Vancouver Island can attend Ralph Hahmann's Tuesday Evening Seminars on McKenzie Avenue in Victoria. (250) 472-0700.Ralph is also with Dundee Wealth Management and is a specialist in Pension Payouts and the co-author of the best selling book, "the Pension Paradigm:.



david ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
US / Canada Real Estate Specialists
My Home office is at:
4466 Prospect Road
North Vancouver,  BC, CANADA, V7N 3L7
Cell (604) 657-8451 -
(604) 980-0321 Fax (604) 980-0325

Calls welcomed from 10 AM to 9 PM 7 days a week  Vancouver (LA) time -  (please do not fax or phone outside of those hours as this is a home office) expert  US Canada Canadian American  Mexican Income Tax  service help.
pert  US Canada Canadian American  Mexican Income Tax  service and help.
David Ingram gives expert income tax service & immigration help to non-resident Americans & Canadians from New York to California to Mexico  family, estate, income trust trusts Cross border, dual citizen - out of country investments are all handled with competence & authority.
Phone consultations are $450 for 15 minutes to 50 minutes (professional hour). Please note that GST is added if product remains in Canada or is to be returned to Canada or a phone consultation is in Canada. ($472.50 with GST if in Canada) expert  US Canada Canadian American  Mexican Income Tax  service and help.
This is not intended to be definitive but in general I am quoting $900 to $3,000 for a dual country tax return.

$900 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only (but were filing both countries) - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
$1,200 would be the same with one rental
$1,300 would be the same with one business no rental
$1,300 would be the minimum with a move in or out of the country. These are complicated because of the back and forth foreign tax credits. - The IRS says a foreign tax credit takes 1 hour and 53 minutes.
$1,600 would be the minimum with a rental or two in the country you do not live in or a rental and a business and foreign tax credits  no move in or out

$1,700 would be for two people with income from two countries

$3,000 would be all of the above and you moved in and out of the country.
This is just a guideline for US / Canadian returns
We will still prepare Canadian only (lives in Canada, no US connection period) with two or three slips and no capital gains, etc. for $200.00 up. However, if you have a stack of 1099, or T3 or T4A or T5 or K1 reporting forms, expect to pay an average of $10.00 each with up to $50.00 for a K1 or T5013 or T5008 or T101 --- Income trusts with amounts in box 42 are an even larger problem and will be more expensive. - i.e. 20 information slips will be at least $350.00
With a Rental for $400, two or three rentals for $550 to $700 (i.e. $150 per rental) First year Rental - plus $250.
A Business for $400 - Rental and business likely $550 to $700
And an American only (lives in the US with no Canadian income or filing period) with about the same things in the same range with a little bit more if there is a state return.
Moving in or out of the country or part year earnings in the US will ALWAYS be $900 and up.
TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part of a tax return.
8891 forms are generally $50.00 to $100.00 each.
18 RRSPs would be $900.00 - (maybe amalgamate a couple)
Capital gains *sales)  are likely $50.00 for the first and $20.00 each after that.

Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable.  In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years.  We have done several catch-ups where the client has received as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund. 

Email and Faxed information is convenient for the sender but very time consuming and hard to keep track of when they come in multiple files.  As of May 1, 2008, we will charge or be charging a surcharge for information that comes in more than two files.  It can take us a valuable hour or more  to try and put together the file when someone sends 10 emails or 15 attachments, etc. We had one return with over 50 faxes and emails for instance. 
This is a guideline not etched in stone.  If you do your own TDF-90 forms, it is to your advantage. However, if we put them in the first year, the computer carries them forward beautifully.


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