Tax Law
Gambler Hits Jackpot in IRS Case, Sets Tax Precedent
Posted Mar 17, 2008, 06:21 pm CDT
By Martha Neil
A rare precedent-setting win against the IRS earlier this year is making the lucky taxpayer something of a folk hero among those whom fortune hasn't favored to the same extent.
Scrutinized by the federal tax agency over the nearly $2.5 million in gambling losses he claimed during a three-year period, Frank Gagliardi, 46, clearly had an above-average ability to fight his case in court. For one thing, the $26.7 million the compulsive gambler won in the California lottery in 1991 brings in an annual income of more than $666,000 according to the San Diego Union-Tribune and the Online Casino Advisory blog.
That meant he not only had a lot of money to lose at the slot machines, but plenty to pay to fight his case. "Gagliardi brought in psychologists who testified to the nature of addictive gambling; a girlfriend who said he was so busy playing slots it took three days for him to realize she had left him; and witnesses who swore he played right through the 9/11 catastrophe," the blog recounts.
“He had to spend a lot of money to substantiate his losses,” his attorney, Eric Swenson, who tried the case with Allison Cato, tells the newspaper. But, in the end, Gagliardi persuaded a tax-court judge that he had, in fact, sustained seven-figure gambling losses.
Now the case is expected to make it easier for other taxpayers to claim their gambling losses, too.
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Comments
Posted by msg - 3 months, 2 weeks, 4 days, 20 hours, 4 minutes ago
Glad to see someone beat the IRS!
Posted by Nancy - 3 months, 2 weeks, 2 days, 3 hours, 59 minutes ago
So did he actually gain anything from this??
It looks like he spent more “defending” himself than he would have paid in taxes.
Posted by Dave - 3 months, 2 weeks, 2 days, 2 hours, 6 minutes ago
The government is always quick to be the taxpayer’s silent partner when the taxpayer is a winner,insisting upon their cut of any gain.Yet the government is sometimes slow to except the losses incured in their partnership with the taxpayer.
Posted by john - 3 months, 2 weeks, 1 day, 23 hours, 29 minutes ago
Typical gov’t b.s. #3 is exactly right and highlights the many double standards in the gov’t.
Posted by bill - 3 months, 2 weeks, 1 day, 18 hours, 9 minutes ago
#3 is correct BUT keep in mind the ease of proving wins and the difficulty of proving losses
and that is where the expense lies (no pun intended)
Posted by Christine - 3 months, 1 week, 5 days, 23 hours, 25 minutes ago
This is great. Someone who had the money to take on IRS did while set a great precedent for other gamblers. Dont those casino cards keep track of wins and losses? Full time gamblers can now file schedule “C”?
Posted by Diego - 3 months, 1 week, 5 days, 18 hours, 28 minutes ago
I’ve seen the IRS accept ATM withdrawals at casino ATMs as sufficient evidence of gambling losses, but not always. #6 is correct that it is best to always use the ‘players club’ cards from the casinos. I have seen clients get records going back several years from some casinos. He is wrong about the Schedule C though. You can only take gambling losses up to the amount of your gambling winnings, and good luck claiming your travel expenses or those ‘How to Win at Slots’ books.