NET GAMBLING INCOME

D.C. Circuit Rejects IRS’s Per-Bet Approach For Nonresident Alien Gambler

Park, CA-D.C., July 9, 2013

Reversing the Tax Court, the Court of Appeals for the District of Columbia Circuit has found that a nonresident alien could subtract losses from his wins in the U.S. within a gambling session to arrive at per-session wins or losses. The court rejected the IRS’s application of a per-bet rule and applied a per-session rule.

. In AM 2008-011, IRS Chief Counsel had determined that a casual gambler, such as an individual who plays slot machines, recognizes a wagering gain or loss each time he or she redeems tokens. A casual gambler who enters a casino with $100 and loses the entire amount after playing slot machines has a wagering loss of $100, even though she may have had winning spins of $1,000 and losing spins of $1,000 during the course of play, Chief Counsel explained.

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