- 4 -
Petitioner testified that he reported income in excess of the
Form W-2G for both years in issue based upon his personal records
4(...continued)
(1) General rule.--Every person, including the
Government of the United States, a State, or a
political subdivision thereof, or any instrumentalities
of the foregoing, making any payment of winnings which
are subject to withholding shall deduct and withhold
from such payment a tax in an amount equal to 20
percent of such payment.
* * * * * * *
(3) Winnings which are subject to withholding.-
For purposes of this subsection, the term "winnings
which are subject to withholding" means proceeds from a
wager determined in accordance with the following:
(A) In general.--Except as provided in
subparagraphs (B) and (C), proceeds of more than
$1,000 from a wagering transaction, if the amount
of such proceeds is at least 300 times as large as
the amount wagered.
(B) State-conducted lotteries.--Proceeds of
more than $5,000 from a wager placed in a lottery
conducted by an agency of a State acting under
authority of State law, but only if such wager is
placed with the State agency conducting such
lottery, or with its authorized employees or
agents.
(C) Sweepstakes, wagering pools, certain
parimutuel pools, jai alai, and lotteries.--
Proceeds of more than $1,000 from--
(i) a wager placed in a sweepstakes,
wagering pool, or lottery (other than a wager
described in subparagraph (B)), or
(ii) a wagering transaction in a
parimutuel pool with respect to horse races,
dog races, or jai alai if the amount of such
proceeds is at least 300 times as large as
the amount wagered.
* * * * * * *
(5) Exemption for bingo, keno, and slot machines.--
The tax imposed under paragraph (1) shall not apply to
winnings from a slot machine, keno, and bingo.
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Last modified: May 25, 2011