|Posted: June 20, 2006, 6:07 pm - IP Logged|
My understanding (though the IRS could have changed this since) was that you are allowed on your Fed return (if itemizing) to deduct your losses to the extent of your winnings . IOW, if you won $1,000 during the year, you could (with losing tickets as proof) deduct $1,000 in losses.
You certainly can not deduct any amount which is more than your winnings. IOW, if you win, for instance, $1,000 all year, you can not deduct more than that $1000. So if, as you say, this guy is stockpiling losing lottery tickets, and isn't ahead (is a net loser during the year) and tries to claim that on his taxes, he will get audited, and they will not allow it on his return.
The Fed govt may do stupid things, but they surely aren't so stupid as to not have their butts covered on this one. They would have figured out ahead of time that somebody will be stockpiling losing tickets like your customer. Your customer will likely be in for a big surpise.
Some states (on state returns) also allow the same thing as the Fed does on its return. In WI, however, no gambling losses are allowed to be claimed under any circumstances.
How can you tell if a politician is lying?
Answer: His lips are moving.