Losses sustained during the year on gambling transactions are allowed as an itemized deduction but only to the extent of the gains during the year from gambling. In the case of a husband and wife filing a joint return, the combined gambling losses of the spouses are allowed to the extent of the combined gambling gains. Professional Gambler The Supreme Court has ruled that a professional gambler is entitled to deduct gambling losses as a trade or business expense. The … Read more →

The cost of inpatient hospital care which requires an overnight stay, including the cost of meals and lodging, is deductible as an itemized deduction. The extent to which expenses for care in an institution other than a hospital(nursing home, home for the aged, ect.) qualify as a deduction for medical care depends on the situation, condition of the individual and the nature of the services received. Specific Situations If the availability of medical care in an institution is the principal … Read more →

Deductions for hobby activities are claimed as itemized deductions on Schedule A, Form 1040. These deductions must be taken in the following order and only to the extent stated in each of the following three level categories. Level 1 Deductions Deductions that a taxpayer may claim for personal expenses, such as home mortgage interest, taxes, casualty and theft losses, bad debts, worthless securities, tax related expenses, qualified residence interest, medical expenses, charitable contributions, etc. may be taken in full. However, … Read more →

Interest received on state and local government bonds is generally excludable from gross income. A state or local bond is basically an obligation of a state or political subdivision, and the term state includes the District of Columbia and any possession of the United States. Tax exempt bonds are an attractive investment for many investors because the after tax return on such bonds is considerably higher than taxable bonds. Interest received on state or local bonds is excludable from gross … Read more →

When making charitable donations, it is important to understand the rules the IRS will use to value the donation. If a charitable contribution is made in property, the amount of the contribution is normally the fair market value of the property at the time of the contribution. The fair market value is generally regarded as the price at which the property would exchange between a willing buyer and a willing seller, with both having reasonable knowledge of the relevant facts. … Read more →

Code Section 165 basically establishes the general outline that governs the deductibility of losses. This statute permits a deduction for the following categories of losses as long as they the taxpayer is no reimbursed through insurance or otherwise: 1. Losses incurred in a trade or business (deductible without limitation) 2. Losses incurred in transactions entered into for profit, though not connected with a trade or business (deductible as capital losses); and 3. Losses of property not connected with a trade … Read more →