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Gambling winnings

Level 2

I have a client who won about 30000 in a raffle.  Half was cash the other half was a motorcycle.  He's gong to keep the cash and donate the motorcycle to a local charity.  He has a large NOL that was generated from a partnership from 10 years ago.  Is there any reason the NOL won't reduce the winnings to zero.  I've talked to other professionals and it seems there is a split in their opinions.  Thanks

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4 Comments 4
Level 15

If you can't get a consensus from other professionals, it sounds like time to do some research and come to your own conclusion since you will be signing the return.  Google is a good friend to have.

nol carryforward rules - Google Search

Slava Ukraini!
Level 15

The NOL won't reduce the winnings.

It will reduce AGI.

Level 15

Are you sure that's a 10 year old NOL? Why wasn't it used in the last 10 years?

Might it be a passive loss carryover? Or a loss in excess of basis?

Level 15

I've had more than one client with an NOL carryover that ended only with their death many years later.  Typically, someone with a disaster in high-risk years will retire and need only $20K or $30K a year to reduce their AGI to zero.  I keep a "permanent comment" in the files (hard copy and software) to remind me of when it eventually runs out.  25 years for some of them?