Caesars gambling winnings will be reported to the IRS and he will have to report the winning amounts as income. But he will also be able to claim his gambling losses up to the amount of his winnings as an itemized deduction. His training of horses part-time has the possibility of being a business if he is paid for the training and producing business income. The personal expenses for travel ($27,250) for his trips to Las Vegas are not deductible as they are not business related since he trains racehorses in Texas and not in Las Vegas and he only gambles on the racehorses while in Las Vegas.

Caesars winnings of $47,500 are reported as income on a Form W2-G and should be included in his gross income. His losses ($62,400) are deducted on his tax return as an itemized deduction to the extent of his winning. The remaining amount of losses of $14,900 ($62,400 losses - $47,500 winnings) cannot be deducted for any other kind of income and cannot be carried forward for future years.

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