THE TAX ATTIC

Baseball and recreational gambling

Jerry Coon

I needed some event to get me interested in baseball this year. The Tigers have been playing poorly while winning less than half of their games. They are second in the league in strikeouts. Their lead-off hitter Austin Jackson, their starting third baseman Brandon Inge, and their starting right fielder Magglio Ordonez all have batting averages that have been under the dreaded “Mendoza” line, meaning their averages are below .200. Not good. The prized free-agent hitting signee, Victor Martinez, has been hurt, affecting both his playing time and hitting production. There just has not been much to get excited about—until Saturday night.

In one game, Justin Verlander single-handedly got Detroit back on track. He pitched his second career no-hitter against the Toronto Blue Jays. How rare is this? The Tigers are charter members of the American League, starting play in 1901. In their 110-year history, only five pitchers have thrown a total of seven no-hitters. Their first one was thrown in 1912 by George Mullin. Forty years passed, until 1952, when Virgil Trucks threw two no-hitters in the same season—none for 40 years, then two in one season. They had another by now-Senator Jim Bunning in 1958, and then went until 1984 when Jack Morris turned the trick. Then nothing until Verlander pitched his first no-hitter in 2007 and followed up on that with Saturday’s overpowering performance. That puts him in pretty elite company.

Only 30 pitchers in all of baseball history have two or more no-hitters, led by Nolan Ryan with seven. Before we think the Tigers haven’t had many good pitchers, we have to remember there have only been 249 no-hitters and many of the best pitchers ever don’t have any no-hitters. Some Hall of Fame pitchers who never threw a no-hitter include Lefty Grove, Whitey Ford, Don Drysdale and Dizzy Dean. Dizzy’s brother Paul Dean, got his, but Dizzy couldn’t pull it off. Some Hall of Fame pitchers who have one no-hitter include Bob Gibson, Jim Palmer, Tom Seaver, Juan Marichal and Carl Hubbell. In the second All-Star game in 1934, Hubbell consecutively struck out future Hall of Famers Babe Ruth, Lou Gehrig, Jimmie Foxx, Al Simmons, and Joe Cronin. Hubbell was one of the most effective pitchers of the day and perhaps threw the best screwball in all of baseball history, yet he was only able to throw one no-hitter.

My prediction is that Verlander, if he stays healthy, is a future Hall of Famer. We should enjoy watching him pitch as a Tiger. I’m interested in baseball again and hopefully some of those light-hitting Tigers will get interested also.

There is something else new in town that many people are apparently quite excited about. Deb and I drove past the new Gun Lake Casino in Wayland last Friday. The parking lot was full.

The Internal Revenue Service’s term for the gambling that goes on in the casino is “Recreational Gambling.” It seems to me this term is very appropriate with a few exceptions. Most people are there to take in the sights and sounds and win or lose some “recreational” money. It’s not house-losing, life-or-death, sell-the-boat, cash-in-the-IRA, call-Mom-for-a-loan, serious money. However, from time to time, some of the recreational gamblers do win serious money.

Once the winnings exceed $1,200, the casino prepares a W-2G and reports those winnings to the IRS. The taxpayer is then required to report the $1,200 on his or her tax return. This is no different than getting a regular W-2. It’s reportable on the tax return. The big difference with gambling winnings is that the taxpayer is entitled to deduct gambling losses up to the amount of gambling winnings. You would think it would be easy to determine how much to report and how much to deduct. Win $1,200 and deduct whatever you spent to win the $1,200. But how do you account for the six times that the taxpayer won less than $1,200 in the same session and didn’t get a W-2G? That’s where this whole recreational gambling thing gets complicated, in fact very complicated.

Those non-W-2G winnings and losses have to be accounted for as well. The IRS agrees that the correct way of dealing with winnings and losses is to keep track of all the winnings and all the losses from the time the wagering session starts until the taxpayer cashes out and walks away. Any winnings and losses taking place during the session are merely temporary and do not become permanent until the taxpayer cashes out. At that time and only at that time, the taxpayer can actually say what his or her winnings or losses were for that session.

For example, the taxpayer starts out with $100, wins $3,200 and after five hours cashes out with $300. Taking the original $100 out, there were net winnings of $3,200 and net losses of $3,000. The taxpayer is walking out the door with $300, the net profit of $200 plus the original $100. In this case, for this session, the taxpayer would report $200 as Miscellaneous Income and pay tax on the $200. This procedure is followed even though the taxpayer might have received a W-2G for some of the winnings. The net amount of the session is what counts.

At the end of the year, the taxpayer adds up all of the positive sessions, totals all of the negative sessions, and reports this net figure, but not below zero, on the tax return. If during the course of the year, the taxpayer received several W-2Gs that are not reported on the tax return, the taxpayer can expect to be answering a letter of inquiry concerning the bookkeeping that allowed him or her to not report those winnings. That letter of inquiry might even end up as an audit. Some audits end up in the Tax Court and that’s when we get to read about them. I personally find it much more interesting to read about a taxpayer’s gambling adventures while listening to the Detroit Tigers play baseball and drinking a nice, cold, Michigan-brewed, craft beer, than actually going to the Gun Lake Casino and doing some “recreational gambling.” This is Jerry Coon signing off.

Jerry Coon is an Enrolled Agent. He owns
Action Tax Service on Northland Drive in Rockford.
Contact Jerry at www.actiontaxservice.com.

 

Other Stories from the Squire

Top News…

Michigan ChalleNGe cadet meets Dale Earnhardt Jr. ALEXANDRIA, Va. – Respect, hard work, … [Continue Reading...]

Attention veterans! A call to action. Please stand for those who have fallen.   The Moving … [Continue Reading...]

The Rockford Girls’ Lacrosse team has been ranked number one in the Division One poll for most of … [Continue Reading...]

By JOHN HOGAN Rockford - and most of West Michigan, became a water wonderland last week as a … [Continue Reading...]

More Posts from this Category

In Other News

Knowing Your Competition   by David Broyles SCORE Counselor   Regardless of … [Continue Reading...]

Downtown Rockford was as busy this sidewalk sale week as in past years, despite a heat index of over … [Continue Reading...]

Rockford resident, writer and photographer John Hogan shared this picture with the Squire. The … [Continue Reading...]

David S. Fry

They wrote the book on cottage law—literally Recently, Attorney David S. Fry opened the … [Continue Reading...]

More Posts from this Category

Speak Your Mind

*