Assume that you just completed a Spring break week vacation to a resort casino i
ID: 342083 • Letter: A
Question
Assume that you just completed a Spring break week vacation to a resort casino in Atlantic City. (Assume NJ gaming law allows gambling for patrons over 18 years of age.) During your trip you won $100,000 gambling. When the casino exchanged your chips for cash they did not record any personal information, such as you driver’s license number, social security number or address. Come tax time while preparing your tax return you stop to contemplate the fact that the Internal Revenue Service requires taxpayers to report all gambling winnings on Form 1040.
1. Would you report your gambling winnings to the Internal Revenue Service so that you could pay federal income taxes on those winnings?
2. Do you believe that your actions are ethical? Why?
Explanation / Answer
1, As the Casino while exchanging the chips for cash would not record any personal information like social security number or address or driver's license number, so it would not be essential to report the gambling winnings to the IRS through the income tax return. As the casino would not able to report the gambling winning income to the IRS, so there is no record with IRS towards such earnings as the whole income is in cash.
2. Yes, it is un-ethical action to not to disclose the gambling winnings income to IRS even-though it is in cash. But because the situation comes up like this as Casino has not recorded any personal information, so we can exit without paying any tax on such gambling income. So, practically there is no un-ethical activity in this process.