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Don’t bet on gambling-loss deductions

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in Small Business Tax

Q: You recently said that miscellaneous itemized deductions include gambling losses. (See 10/17/05 issue.) But isn't that true only if the losses exceed the winnings? R.B.

A: Yes, the deduction for gambling losses is limited to the amount of your winnings from gambling activities during the year. You earn no deduction for any excess losses. Our earlier discussion of the court case referred to a taxpayer using his gambling winnings to offset against his losses. Tip: The 2 percent of adjusted gross income floor on miscellaneous deductions applies to the amount of the allowable gambling losses.

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