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Re(2): IRS softens 'signer' rules

Here is some more info which shows a different take, from Steve Crist, owner of daily racing form:

Currently, payoffs are reported to the IRS if they are $600 or more and at odds of 300-1 or greater, so a $2 trifecta payoff of $700 is reported to the IRS. In addition, 25 percent of the proceeds are withheld for federal taxes if the payoff is 300-1 or more and exceeds $5,000.

The problem is that under the current language of the regulations, these thresholds for reporting and withholding are based on the faulty assumption that the bettor has made only a single winning $2 bet rather than being based on the size of his actual investment into the pool. If someone puts $24 into a trifecta partwheel wager that returns $744, he has actually gotten 30-1 on his investment into the pool but the IRS acts as if he has gotten at least 300-1.

Under the new regulations, your TOTAL investment in any pool made on the same ticket must return 300-1 and $600 or more for winnings to be reported and return 300-1 and exceed $5000 for 25% of winnings to be withheld. So, that $24 trifecta partwheel reaches the reporting and withholding thresholds only if you receive 300-1 on the $24 play, not 300-1 on a theoretical lone $2 bet. Thus, that winning trifecta only becomes subject to reporting and withholding if it pays over 300-1 on $24, or $ 7,224.



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