Gamblers Can Now Owe Taxes Even When They Lose Money

I share the 4-5 most important accounting that actually matter. I scroll so you don’t have to.

So grab your coffee, take a quick break, and lets catch up.

In this issue:

• Gamblers can now owe taxes even when they lose money

• The IRS is barely policing giant offshore accounts

• Rory just won the richest Masters in history

- Ledger Lowdown Team

WTF of the Day🤯

Gamblers Can Now Owe Taxes Even When They Lose Money

The tax code just got way uglier for gamblers. Under the old rules, if you had $25,000 in winnings and $25,000 in losses, it washed out. No taxable gambling income. Starting this year, you can only deduct 90% of your losses. So if you win $25,000 and lose $26,000, you still end up with $1,600 of taxable income even though you actually lost money. Yes, really.

One CPA said he has a client who cycles about $1 million in winnings and $1 million in losses every year. Under the new rule that person could end up showing $100,000 of phantom income. And if gamblers do not keep records, it gets even worse. Another CPA said she had a client pay tax on a full $10,000 lottery win because she could not prove her losing tickets. The IRS assumes winnings are real and losses are fiction unless you can prove them. So the new rule is bad, but bad recordkeeping makes it brutal.

What’s poppin in accounting🍿

The IRS Is Barely Policing Giant Foreign Bank Accounts

The IRS can fine taxpayers up to $60,000 for not filing Form 8938, the form you're supposed to file if you hold large foreign financial assets. Problem is they almost never do it. A new watchdog report says the IRS identified 405 taxpayers with big foreign bank accounts who looked noncompliant and still barely enforced anything. Out of 164 people referred for possible audit, only 12 were actually examined. Just five ended up with more tax due, totaling $39.7 million, and penalties added up to only $80,000. The other 241 got letters, mostly educational ones, and none of them got hit with the initial $10,000 nonfiling penalty.

And the numbers here are ridiculous. The 164 referred for exam had an average unreported foreign account balance of $1.3 billion. The other 241 who just got letters had an average balance of $377 million. These are not people forgetting to check a box on TurboTax. TIGTA basically said if the IRS is not going to enforce FATCA even when obvious noncompliance shows up, then it needs to admit that and figure out whether the whole program is worth the money. The IRS pushed back on most of the recommendations and said potential noncompliance is not the same thing as proven wrongdoing. Fair enough. But if you are wondering whether the IRS is aggressively policing offshore wealth right now, the answer looks like no.

Weekly Trend Chart 📊

This Year’s Masters Had the Biggest Prize Pot in History

Rory McIlroy just won the Masters for the second year in a row and made $4.5 million doing it. That makes him just the fourth golfer ever to win back to back at Augusta, joining Tiger Woods, Jack Nicklaus, and Nick Faldo. It also gives him six major titles and makes him the highest earning player in Masters history.

But here is the fun part. The Masters purse is now $22.5 million, more than double what it was a decade ago. Rory's payout this year was 2.5 times what Tiger got for winning in 2001. And even that is not the real money. Tiger barely played last year and still made $45 million off the course from sponsors and brand deals. So yes Rory got paid, but in golf the trophy is the headline and the sponsorships are the business.

Meme of the Day😂

  😂

Did today’s edition help?

Reply to this email and tell me what you liked (or didn’t).