The reason why the IRS loves gamblers to use a gambling diary is obvious. A gambling diary organizes the gambling transactions and documents in such way that makes it easier to verify – plain and simple.
Between 1934 and 1977, it was anybody’s guess as to the record keeping requirements for wagering losses.
Then in 1977, the IRS published Revenue Procedure 77-29 and provided guidance as to the acceptable evidence for keno, slot machines, table games, bingo, racing and lotteries.
In Revenue Procedure 77-29, the IRS recommends that gamblers maintain a gambling diary or log and at a minimum provide the following general information:
- Date and type of specific wager or wagering activity;
- Name of gambling establishment;
- Address or location of gambling establishment;
- Name(s) of other person(s) (if any) present with taxpayer at gambling establishment; and
- Amount(s) won or lost.
The IRS further describes more specific information needed depending on the gambling activity.
For additional emphasis, the IRS repeats these requirements in their annual instructions, Publication 529 Miscellaneous Deductions. (Please note, the Lady Luck Gambling Diary: Slot Machine Edition meets these requirements.)
Such record keeping makes it easy to prepare the tax return, and prove the gambling-related amounts. And if you are an IRS auditor, it makes that part of your job so much easier to verify.