To join in on this discussion, you must first log in.

Discussion:Gambling winnings gone to Trust

From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.

From TaxAlmanac

Jump to: navigation, search

Discussion Forum Index --> Advanced Tax Questions --> Gambling winnings gone to Trust


Discussion Forum Index --> Tax Questions --> Gambling winnings gone to Trust

Ztom (talk|edits) said:

22 February 2012
Client won money in Las Vegas(1.6million) been receiving w2g for 88k per year,until client died. The balance of payments are going to spouse(community property state). The lawyer for the firm in Nev who distributes the income said the spouse needed a Trust ID number. After getting the number the Las Vegas firm starting sending the w2g to the trust #. Since the money is going to the trust the spouse is not able to write off gambling loses because he would be receiving a K1 from the trust for the 88k. I am not sure what to do. If I go ahead and file 1041 and distribute to spouse no gambling losses. Looking for input (sometime this job really sucks)To add the crap the client says the 2010 w2g was also made to the trust, which I was not aware of, I missed seeing the Trust EI on the w2g. Helppppppppppppppp

HowardS (talk|edits) said:

22 February 2012
Just taking a swag here but gambling losses go to line 28 of sched A so why not continue to deduct them there? The K-1 gambling winnings distributed by the trust should go to line 21 so everything should be consistent. Gambling losses? She should quit while she's ahead.

HowardS (talk|edits) said:

22 February 2012
Meant to say line 21 of form 1040.

Dennis (talk|edits) said:

22 February 2012
Personally I can't see a deduction for current losses against past winnings, however the first thing you need to do is determine if there is actually a trust. The Las Vegas attorney undoubtedly saw some kind of documentation before asking for a Trust ID. Perhaps a trust was created under will. But just because you have an ID# doesn't mean a trust actually exists.

If there is no trust you can enter the amount directly on her return as nominee income.

RBruce (talk|edits) said:

22 February 2012
Yes. Assuming the trust isn't operating some sort of gambling business, it is merely acting as a conduit for the W2G income, so it retains its character as gambling winnings. I think any losses incurred by the individual members can still go on schedule A and be reduced by the 2%. But I'd be reticent to file a trust return without having a copy of the trust in my possession.

Dennis (talk|edits) said:

23 February 2012
I dunno. I agree that character would be retained to the extent of distributions but the payout is corpus to the Trust and document language matters. The lack of relationship between who actually won and who actually lost as well as the disparate timing also matters. See AM2008-011

The IRS may not have established exactly what a gambling session is, but I can't see this one fitting...♫

HowardS (talk|edits) said:

23 February 2012
No carryover of gambling losses...my answer was based on current year gambling losses, not past years as an offset to winnings. Trust doc should state if this payout is allocated to corpus or income.

DonPriebe (talk|edits) said:

23 February 2012
I think any losses incurred by the individual members can still go on schedule A and be reduced by the 2%.

Gambling losses are not reduced by the 2%. They go on line 28.

To join in on this discussion, you must first log in.
Personal tools