IRS gambling losses

Anyone with real experience/knowledge with reporting gambling losses to offset W-2 reporting? From the IRS publications, there are requirements for a diary with dates, times, table/slot number, amount. Although tedious, this is doable. I have heard rumors about using player's card tracking information for losses, but there is nothing on IRS about this. One manager warned me that card tracking was not acceptable by IRS for gambling losses but the casino may provide such information up to the amount of some W-2 win at that casino.

Also, I have read that comps are reportable as "gift taxes".

Last year, I had $3400 in W-2 and lost most of that but had no "diary" so paid the taxes. Already this year I have $4000 in W-2 but a diary of more than $2000. Its not chump change to IRS or me. What do I do here to not pay the tax and not get audited or win the audit? Is this a no win situation?

...you must report gambling winnings on line 21, Form 1040.
Again these are the winnings. Losses, up to the amount of your winnings, can be deducted only if you itemize (i.e. prepare Schedule A, Itemized Deductions).Losses go on Line 27, Schedule A.

From the IRS:

To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses.

A and F, CPA

Leonard,

The diary is the most acceptable documentation as far as IRS is concerned. Also, it has to be comtemporaneous. The other documentation would be a substantiation of the entries in the diary, such as, ATM withdrawals, markers, canceled check for cash or to the casino, casino records of your slot and vp playing, losing ticket wagers for sports betting, etc. The reason they don't accept the casino playing records by itself is, someone else could have been using your player card.

Form 1099 is issued for winnings from drawings and Form W-2G for slots and vp. You can take the position that the Form 1099 winnings are gambling winnings if the drawing tickets resulted from your gambling activities. This would enable you to deduct your gambling losses against it. I have not been challenged yet by IRS on this, but that doesn't mean they concur. They can take a hard line position and disallow it any time they choose to do so.

Neko

Thanks Neko! You confirmed about what I suspected.

My real problem with the winnings is that to claim the losses, I must itemize deductions (I cannot possibly come up with the standard deduction without some kind of serious medical problem or huge donation). So, I think in the end, I will have to bite the bullet and pay taxes on winnings I have mostly lost. The only casino to make money off me is the IRS. Are they scam artists or what?