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Critical Thinking Allen visits Reno, Nevada, once a year to gamble
Critical Thinking Allen visits Reno, Nevada, once a year to gamble. This year his gambling loss was $25,000. He commented to you, "At least I didn't have to pay for my airfare and hotel room. The casino paid that because I am such a good customer. That was worth at least $3,000." What are the relevant tax issues for Allen?
Expert Solution
Gambling losses are tax deductible. But these are only to the area of winning from gambling. Now those benefits supplied by the casino are taxable as ordinary income. Tax issue is that Allen would need to comprise $3000 benefit supplied to him by the casino in the manner of hotel room and airfare charges in his gross income. So, unless he has winning from gambling, he would not be allowed to deduct the gambling losses. So, he would have to overcarry his gambling losses to be modified in opposite of winning from gambling in time to come.
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