Question

Bill, a full-time engineer, won $50,000 at a local casino. In addition, he had $65,000 in gambling losses. Will Bill report the winnings and losses on his personal tax return? If so, how should they be reported?

a. 50,000 income on form 1040 and 50,000 loss on schedule A

b. 50,000 income on form 1040 and 50,000 loss on Form 1040

c. 50,000 income on form 1040 and 65,000 loss on schedule A

d. 0 income since it is canceled out with the loss

Answer 1

The correct option is (a). $50,000 income on form 1040 and $50,000 loss on schedule A.

Explanation: The taxpayer is required to report all the gambling income as “other income” on Form 1040 and the gambling losses cannot be more than the gambling income and should be reported on Section A.

Therefore, Bill should report $50,000 income on form 1040 and $50,000 loss on schedule A.

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