Tax Problem: Your client Ray was overly stressed and quit

Tax Problem: Your client Ray was overly stressed and quit his job as a corporate executive. Rather than finding a new desk job Ray decided he would devote his newly found free time to betting on horse races. Ray devoted a significant amount of time to studying the horses and race related information. In fact he spent more than 60 hours each week on racing activities. Having previously worked as an executive Ray kept very detailed accounts of his wagers wins and losses. In the prior year Ray reported net winnings of $100000 on bets of $113000 thus resulting in a net gambling loss of $13000 for the year. Your manager has asked you to prepare a tax research memo indicating how Ray should report his gambling winnings and losses.

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