The American Institute of CPAs (AICPA) has asked the Department of the Treasury and the Internal Revenue Service (IRS) to provide guidance on the session method for substantiating wagering gains and losses. The AICPA submitted comments highlighting unresolved issues in proposed regulations that could affect taxpayers.
While Treasury and the IRS have issued proposed regulations (REG-113229-25) addressing Section 165(d) and the rules governing Form W-2G, the proposed regulations do not address how taxpayers should measure, substantiate and report wagering gains and losses. Addressing these issues would improve administrability and reduce uncertainty for taxpayers.
The AICPA recommends that Treasury and the IRS issue guidance addressing the following:
- Define a gambling session for purposes of measuring wagering gains and losses and provide a corresponding safe harbor.
- Identify which records constitute adequate substantiation of wagering gains and losses under the session method, and confirm that account histories, win-loss statements, player activity summaries and similar records that gaming operators furnish to patrons may be relied on for that purpose.
- Apply the session method to multiple types of wagering, including table games, horse racing, electronic gaming or other types of wagers.
“The AICPA is asking Treasury and the IRS to establish a consistent session-based approach that better reflects taxpayers’ economic gains and losses, clarify what records can substantiate those results and apply the approach across different types of wagering,” said Scott Klein, Senior Manager, AICPA Tax Policy & Advocacy. “The growth of online and mobile wagering and the new 90% limitation wagering losses have made clear, practical rules for reporting gambling gains and losses more important than ever. Without clear rules, taxpayers can face higher taxable income, reporting discrepancies and uncertainty over how to substantiate their activity.”
Sign in to get access to this free resource, and all of our whitepapers and reports.
Download this content today!
Register Now Already registered? Click here to Log In
Tags: AICPA, gambling, gambling taxes, Income Taxes, Taxes, w-2g, w2-g, w2g
