Quote:
Originally Posted by akashenk
I agree with everything you say except it is all based on filing gambling winnings/losses (or other deductions) on an individual person's Schedule C and 1040. If a person is a shareholder of an S-Corp, they do not report business income/loss on a schedule C. The business entity itself files a return and any net income is reported as pass-through income on the individual's return in a schedule K. So, the gambling business, would deduct the gambling-related expenses. Nothing in the info I have seen about the IRS clarification seems to indicate that a business would no longer be able to deduct these expenses in their returns. So, I think the distinction may just come down to... does your legal entity file a separate return? If the answer is yes, I think the business deductions will remain. If the answer is no (ie if your business activity is captured in your individual Schedule C/1040), then it appears the deduction will be limited until this provision expires.
I have come back from meeting with my tax advisor. As I expected, she is in agreement with me that the new law would in no way limit what an s-corp (formed for gambling purposes) could deduct as far as business expenses are concerned. So, if you're incorporated as an s-corp, your company can continue to deduct your travel, training, other related business expenses on your business tax return.
And this is the crux of the matter of what I originally mentioned. Since there ARE new limitations on how much, in the way of gambling-related expenses, can be deducted on one's PERSONAL tax return, it seems to me there may be some cases where incorporation would be a beneficial strategy.
Anyhow, this is her and my opinion. Hers is more qualified than mine, but even so, it seems that one can ask the same question to two different accountants and get two different answers. As always, I would recommend anyone directly affected by the changes in this new law to consult their own tax professional who would be more familiar with the specifics of their unique situation.