A $700,000 gambling loss seemed like a legitimate business deduction to one mortgage business owner.
He said he had foreign clients visiting from China who liked to gamble and he needed to entertain them -- and participate, said Dominique Molina, president of the American Institute of Certified Tax Coaches.
Gambling losses can actually be deducted to the extent you have winnings -- for example, you could deduct $20,000 in losses if you also had $20,000 in winnings. Molina's client was therefore only able to deduct $280,000 in gambling losses, since that was the amount he had won that year.
