Question 5 tax 2007

Question 5 tax 2007 - Question 5: Some family members have...

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Unformatted text preview: Question 5: Some family members have net losses from gambling while another family member has a substantial gain from winning the lottery. You know that the family members are going to give the losing tickets to the winning family member. How would you handle the client if they insisted on taking the deduction? This is a tricky question because we are dealing with laws and potentially breaking it. However, the client is insistent on giving the losses to the winner so it will lower the lottery winnings therefore lowering the taxes needed to be paid on it. You dont want to lose a client but you also want to follow the IRS and the law. I would explain that upon winning the lottery the person who won should have received Form W-2G. On this form it states the payers name, address, type of wager, federal tax withheld (typically between 25% and 30%) and most importantly the earnings. It also states the winners name, address, SSN, etc I would go on and continue to explain that a loss from Casino A for Mr. X can not be given to Mrs. X to be would go on and continue to explain that a loss from Casino A for Mr....
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