Elmore_Tax Memorandum_1 - MEM O To From Date Re Message Dr...

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MEM O To: Dr. Green From: Nikeya Elmore Date: Week 4 Re: Tax Memo #1/ Gambling Activities Message: FACT: Dr. Green is a practicing physician in Chicago who, as an avid blackjack and slot machine player, travels to Las Vegas every other weekend to gamble. He would like to know what criteria are used to determine whether his gambling activities constitute a trade or business for federal income tax purpose and whether or not you think his gambling activities qualify for trade or business status. APPLICABLE CASE LAW, CODE & REGULATIONS: The IRS deems a business or trade that is intent to make profit and entrepreneurial effort. An activity is presumed a business if it results in a profit in any three out of five year consecutive taxable years. If the business is not for profit, losses from the activity can be used to offset income. Deductions for hobbies can be deduction on Schedule A. The following must be met in order for an activity to be a business: Does the time and effort put into activity indicate an intention to make a profit?
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