Are comps taxable

LiveInPeace · #1 10-16-2007, 06:18 PM

My guess would be yes, casino comps are taxable, but I wondered what others thought. They can mount up over the year if received on a regular basis.

Photoc · #2 10-16-2007, 06:21 PM

They are not classified as income. They're more of a "rebate" than anything.

*TT* · #3 10-16-2007, 07:01 PM

[ QUOTE ]
They are not classified as income. They're more of a "rebate" than anything.

[/ QUOTE ]

I have read that the IRS has ruled casino comps as taxable. Its the same thing as when you spend points for travel rewards. I was also told this was the reason why the Borgata stopped giving out small promotional gifts like hats and jackets at the poker room. This makes sense because consumer rebates are taxable as income. I suggest you contact your tax preparer for more information, he or she will be better qualified to advise.

Photoc · #4 10-16-2007, 07:08 PM

I can't see how "comps" can be treated as income when in reality it's a rebate on theoretical losses in a casino. If you lose 100k and are comped 10k worth of items, how could that possibly be taxeable? You really only lost 90k and that money was taxed when it was originally earned by the bettor. (in normal circumstances) I hate the IRS lately.

*TT* · #5 10-16-2007, 07:28 PM

[ QUOTE ]
I can't see how "comps" can be treated as income when in reality it's a rebate on theoretical losses in a casino. If you lose 100k and are comped 10k worth of items, how could that possibly be taxeable? You really only lost 90k and that money was taxed when it was originally earned by the bettor. (in normal circumstances) I hate the IRS lately.

[/ QUOTE ]

although in theory I agree with you, the IRS doesn't agree with us [img]/images/graemlins/frown.gif[/img]

esch · #6 10-16-2007, 07:40 PM

Comps could be treated as income by the IRS (like gambling wins), but if so, they can probably be offset by gambling losses.

Mr Rick · #7 10-17-2007, 09:06 AM

[ QUOTE ]
Comps could be treated as income by the IRS (like gambling wins), but if so, they can probably be offset by gambling losses.

[/ QUOTE ]
This is true, IMO.

Comps would be part of the gross winnings. If gross losses are greater, then there is no taxable gambling income.

For gambling professionals, business expenses would also offset gross winnings. And the comps could have no tax impact depending on what they were used for (e.g., if they were used for a room during a trip, it is a net wash, if they were used for meals then 50% would be considered winnings).

*TT* · #8 10-17-2007, 10:30 AM

[ QUOTE ]
[ QUOTE ]
Comps could be treated as income by the IRS (like gambling wins), but if so, they can probably be offset by gambling losses.

[/ QUOTE ]
This is true, IMO.

Comps would be part of the gross winnings. If gross losses are greater, then there is no taxable gambling income.

For gambling professionals, business expenses would also offset gross winnings. And the comps could have no tax impact depending on what they were used for (e.g., if they were used for a room during a trip, it is a net wash, if they were used for meals then 50% would be considered winnings).

[/ QUOTE ]

guys "IMO" - which stands for In My Opinion" statements when it comes to tax issues are false and invalid. The only thing that matters is fact, the IRS doesn't care about our opinions.

I'm pretty sure you cannot combine comps into your gross winnings, which are then offset by gross losses. I think read a sample case in Walter Lewis's Gamblers Guide to Taxes. I searched for the book in my home but I cannot find it to verify (but i did find How to Turn Your Poker Playing into a Business by Ann-Margaret Johnston - another great tax book but unfortunately it doesn't cover comps).

I suggest anyone interested in this subject get both books, and contact a qualified CPS such as 2+2's own Russ Fox (send him a PM), Ann-Margaret Johnston or Walter Lewis.

jasonfish11 · #9 10-17-2007, 11:00 AM

[ QUOTE ]
guys "IMO" - which stands for In My Opinion" statements when it comes to tax issues are false and invalid. The only thing that matters is fact, the IRS doesn't care about our opinions...
and contact a qualified CPA such as 2+2's own Russ Fox (send him a PM), Ann-Margaret Johnston or Walter Lewis.

[/ QUOTE ]

Be careful with CPAs depending on how old they are they may not have been required to understand tax laws when they took their test. But any competent CPA wont give out advice they are not completely sure about anyways (hence the reason I didnt answer the first question)

Also there are some good tax forums (just like this form but for tax questions).

Try MSN's tax corner (google it, it should be the first link)

*TT* · #10 10-17-2007, 11:06 AM

[ QUOTE ]
Be careful with CPAs depending on how old they are they may not have been required to understand tax laws when they took their test.

[/ QUOTE ]

The CPAs listed in my last post are all respected and trusted within the gambling community. Countless 2+2'ers and pro players have had their taxes prepared by them. I know Russ Fox personally, he does the taxes for a lot of the ARG'ers.