01/02/2013 4:02PM

Gambling deductions remain intact for new bill

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High-earning horseplayers will continue to be able to deduct their gambling losses up to their winnings despite a limitation on other deductions in the tax-and-spending package passed by the House and Senate on Jan. 1.

Discussions on the tax-and-spending package had included limiting the amount of gambling losses that high earners could deduct as a way to raise more revenue for the federal government, according to Alex Waldrop, the chief executive of the National Thoroughbred Racing Association, which spearheads Thoroughbred racing’s federal lobbying efforts. However, despite a restoration on a limit on itemized deductions for individuals earning $250,000 or more or couple earnings $300,000 or more in the last-minute package passed on New Year’s Day, the language allowing gamblers to deduct losses up to winnings was not changed.

“For now, it’s the status quo,” said Waldrop. “Without the exemption, certain horseplayers wouldn’t be able to take advantage of their deductions.”

Under current tax law, many horseplayers offset winnings from bets requiring mandatory reporting to the IRS with their losses. Typically, those losses require paper trails such as losing pari-mutuel tickets and journal entries about betting activity to withstand the scrutiny of an audit.

– Matt Hegarty