Couple’s $500K Gambling Loss Deduction Won’t Fly

(CN) - An Illinois couple must pay taxes on their gambling winnings, but they cannot claim their losses as deductions, a state appeals court ruled.

Because the Illinois Department of Revenue found that Jerry and MaryLou Byrd visited casinos as recreational gamblers, rather than as part of a business, it would not let them write off their losses for the tax years 1999 through 2002.

The Byrds did most of their gambling at the slot machines of the Hollywood Casino in Aurora and the Grand Victoria Casino in Elgin.

A trial court agreed with the department that the Byrds owed an additional $60,382 in state taxes, despite having incurred $437,977 in gambling losses during that period.

Illinois' second appellate district court, based in Elgin, affirmed the lower court's ruling.

"We conclude that, because the evidence shows that the Byrds did not devote themselves full-time to gambling but that Jerry Byrd continued to work full-time in the graphic arts industry, where he drew a comfortable salary that supported the Byrds' gambling, there was no clear error in the department's determination that the Byrds' gambling activity was a pastime, not a trade or business," Judge Joseph Birkett wrote on behalf of the court.

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