Gregory Alberico - Page 4

                                                - 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