Ezel / IRS Rulings / 200912012

CCA 200912012: A professional gambler could deduct business expenses after offsetting gains with wagering losses

Number
200912012
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Wagering Losses; Trade or Business (Deductible v. Not Deductible)
Topics
Income and deductions
Code sections
§ 165, § 162
Ruling dated
February 12, 2009
Publicly released
March 20, 2009
Source
View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2009, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2009
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

Chief Counsel illustrated the treatment of a professional gambler's wagering and business expenses. The gambler had to report all wagering gains as gross receipts and could subtract wagering losses only up to the amount of those gains. Any excess wagering loss could not carry to another year or offset other income. After that calculation, the gambler could also deduct separate business expenses.

Ruling snapshot

  • Question: How should a professional gambler account for wagering gains, excess wagering losses, and other business expenses?
  • Outcome: Advice given: wagering losses could offset only wagering gains and could not carry over, while separate business expenses were deductible.
  • Key authorities: IRC §§ 162, 165(d).

Full text (IRS public release)

ID: CCA_2009021216482148 Number: 200912012
Release Date: 3/20/2009
Office: ----- ----------
UILC: 165.08-00, 162.00-00

From: ------------------
Sent: Thursday, February 12, 2009 4:48:23 PM
To: -------------------------------
Cc:
Subject: RE: Memorandum AM2008-013

Hi ---------

That is correct. Here is an example if it helps.

Taxpayer, a professional gambler, has $400 of wagering gains, $500 of wagering losses, and $200 of business expenses. The taxpayer must report the $400 of wagering gains as gross receipts. The taxpayer then may subtract only $400 of his
$500 of wagering losses from gross receipts, completely offsetting his $400 of wagering gains. The taxpayer may not carry over the excess $100 of (unused) wagering losses to offset wagering gains or other (non-wagering) income in another taxable year. The taxpayer may then, also, deduct the $200 of business expenses.

Hope this helps,

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