Daily Netting of Gambling Wins/Losses

In lieu of filing a separate information return for each payment of reportable gambling winnings, a payor may use the aggregate reporting method to report gambling winnings from bingo, keno, or slot machine play on a daily basis. An information reporting period is either:


  1. A “calendar day” (determined with reference to a period beginning at 12 AM and ending no later than 11:59 PM of the same calendar day) or
  2. A “gaming day” (a 24-hour period other than a calendar day selected by the payor), as long as that period is applied uniformly by the payor to all payees during the calendar year¹. (On December 31, all open information reporting periods must end at 11:59 PM in order to end by the end of the calendar year.) Changes to a payor’s information reporting period from one calendar year to the next must be implemented on January 1.

Daily Netting of Gambling Transactions


  • Couple gambled recreationally
  • Went to casino with $500
  • Husband hit $2,000 jackpot
  • Left casino with $1,600
  • Not itemizers

How should this be reported on their return?

  • The Tax Court ruled in a manner that agrees with prior advice issued by IRS’s Chief Counsel, stating that gambling winnings and losses should be netted on a daily basis.
  • If the gambler leaves the casino with more money than they had when they entered, that excess is the day’s net winnings which must be reported for that day.
  • All days’ net winnings are added together, and that total is the income that must be reported as “Other Income”.
  • Losses to the extent of winnings are reported on Schedule A, Line 16 (Miscellaneous Itemized Deduction not subject to the 2% of AGI haircut).
  • Couple should report only $1,100 ($2,000 jackpot winnings less $500 brought to the casino for gambling and less $400 taken from the jackpot for additional gambling) as income on their return².

Avoid a CP-2000 notice

IRS’s Chief Counsel has issued the same advice on several occasions in recent years. To avoid a CP-2000 notice, report the gambling winnings shown on the W-2G on Schedule 1, Line 8b, Gambling. Then make another entry as a negative on Schedule 1, Line 8z to adjust the income to the correct amount of daily net wins. Title this adjustment “Gambling losses from same day per Chief Counsel Advice 2008-011.”


Gambling on Multiple Days

On other days Couple had these results:

  • Day 1 – $1,100 net win (as shown above)
  • Day 2 – $1,000 net win
  • Day 3 – $4,000 net loss
  • Day 4 – $2,500 net loss
  • Taxpayer receives W-2Gs reporting $8,000 of jackpot winnings. The taxpayer won big and believed they were on a streak, so they played until they lost most of the money on the same day they won the jackpot.

How should these transactions be reported on their return?

  • The total net win days ($1,100 + $1,000) should be reported as income
  • Report $8,000 of W-2G winnings on Schedule 1, Line 8b
  • Report a negative adjustment of $5,900 called “Same Day Gambling, CCA 2008-011”
  • This will make the net reportable gambling income $2,100, which is the proper amount of income to report per the same day netting of gambling winnings and losses.
  • The total net loss days ($4,000 + $2,500) should be reported on Schedule A, Line 16, Other Itemized Deductions not subject to the 2% haircut, but the deduction is limited to the winnings reported, $2,100.

This reporting method provides a better tax result because instead of reporting $8,000 of income, which will increase AGI, they only need to report $2,100. This is an invaluable strategy for taxpayers who do not itemize (meaning they wouldn’t normally be able to deduct the gambling losses) and for those who have other tax benefits that are contingent upon having a lower AGI.

Books and records

For this strategy to hold up under audit, the taxpayer needs to have some way to document their net winnings and losses for each day. Some casinos will track this information via the taxpayer’s casino player’s card. Unfortunately, many casinos will only provide an annual win/loss statement (as opposed to a daily statement). In these scenarios, taxpayers will need to keep their own records.


Conformity to Same-Day Netting

Same-day netting of gambling transactions is not a law change; it is an interpretation of the federal law. CA conforms to the federal law, so this interpretation should also apply in CA.

1: Reg. §1.6041-10(b)(2)
2: George Shollenberger, TC Memo 2009-306

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