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A friend won a reality show a few weeks ago. About $20k. They gave him all $20k and he has to figure out the taxes.

Riding high on the money, he did what any beer drinking, pot smoking, god-loving American would do - go to Vegas. So he lost about $8k playing blackjack - and astonishingly did so playing $10 a hand. He has records to back this up.

What are the tax implications at the end of the year for this rollercoaster of money? Are the items even related?

His family income is about 120K per year, married with 2 kids if that matters at all.

blankip
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Gambling losses are only offset by winnings. Those losses can't offset other income. So, the guy that wins the $1M jackpot can deduct the $100 he spent on tickets that year.

JoeTaxpayer
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My wife was once on a game show. The income was 1099 and wholly unrelated to gambling. I did offset the hotel cost on a schedule C against it (and filed a California return to get back the withholding) but a television appearance for a prize is not gambling. It is pay for a performance and she didn't risk any of her own money. Your friend's 8k loss can only offset casino or lottery winnings, sorry.

user662852
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Gambling is perhaps not well defined, but it certainly doesn't include things like reality show winnings.

However, it is possible he could deduct something for this. If the reality show qualifies as a "hobby", and his expenses exceed the 2% of AGI requirement, it's possible he could deduct those airplane tickets and such. That deduction is explained in Publication 529.

Joe
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