Michael won $500 at Lucky Casino and $1,250 at Riverboat Casino. His losses for the year...

Michael won $500 at Lucky Casino and $1,250 at Riverboat Casino. His losses for the year at Lucky Casino were $800 and his losses at Riverboat Casino were $900. He also spent $100 for lottery tickets without winning anything. How much can he deduct on Schedule A (Form 1040 or 1040-SR) for gambling losses? $1,400 $1,700 $1,750 $1,800

Expert Solution

Solution :

Gambling Winnings :

All the winnings from gambling like lottery, horse races, card games, etc.. should be reported under "other income".

Gambling Losses :

Gambling losses can be deducted only if the deductions are itemized. Gambling losses can be claimed only upto the Gambling income. The losses claimed cannot exceed the gambling income.

Lottery tickets :

The expense incurred to purchase lottery ticket can be claimed as deductions if the deductions are itemized. Also, the expense on lottery tickets can be claimed only if there is any kind of gambling winnings, even if there is no winnings from lottery.

In the given case :

Winnings from gamblings = $500 + $1,250 = $1,750

Losses from gamblings = $800 + $900 = $1,700

Expense on lottery tickets = $100

Sum of gambling losses + expense on lottery tickets = $,1800

However, the eligible deduction cannot exceed the gambling income.

Hence total eligible deductions shall be restricted to $1,750.

Final Answer : $1,750

ekkarill92 answered 2 years ago

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