If you’re a golfer, you’ve surely heard of “Long John” Daly, renowned for his distance off the tee. In 1991, he roared onto the scene by winning the PGA Championship as the ninth alternate. In 1997, he became the first PGA player to average more than 300 yards per drive over a full season. Daly can probably hit the ball farther with a shovel or a rake than we can hit it with Callaway’s newest and highest-tech driver. He hasn’t won a tournament since 2004, but his legion of fans still love him for his bad-boy, “non-country club” appearance and attitude. And who knows how he might “grip it and rip it” when he becomes eligible for the Senior Tour in 2016?
Daly is a man of many appetites. He’s designed golf courses, licensed his own “Loud Mouth” line of clothing, owned a winery, and even recorded an album of his own songs. He’s a legendary boozer with seven trips to rehab under his belt — in fact, he’s even got a drink named after him. (Take a classic “Arnold Palmer” mix of iced tea and lemonade, add liquor of your choice, and voila, you’ve got a John Daly.) But his greatest vice may be his gambling. And that’s where our friends at the IRS come in.
Daly loves, loves, loves to gamble. He told the gossip site TMZ that it was more about the adrenaline than the money . . . he really just loved the action. He would take out million-dollar markers to hit the blackjack tables, then play seven hands at a time for $15,000 each. In 2006, he lost a playoff to Tiger Woods, drove straight from the tournament in San Francisco to Las Vegas, and dropped $1.65 million in five hours on a $5,000 slot machine. (Hey, we’ve all been there, right? No?)
The news wasn’t all bad. Daly kept detailed records so that when it came time to file his taxes, he took all papers to his income tax preparer so that he could deduct his losses from his wins. So how did he do? Well, according to Daly, he won $35 million from 1991 through 2007. That’s pretty good, considering his lifetime tour winnings total just $10,116,306.
There’s just one problem. Over that same period, he lost $90 million. Ninety million dollars. For those of you who dropped math as soon as you could, that’s a $55 million hole! It took him 10 years to pay off gambling debts, with sponsorship income, hustling appearance money, and “running myself ragged doing corporate outings instead of spending time with my family and working on my game.”And how did Daly come up with those figures? Combing through his tax records, of course! Gambling losses are deductible, sure — but only up to your amount of gambling winnings. That means if you go home a winner, Uncle Sam will be happy to take a cut — but if you’ve lost, you’re on your own. (That’s an even better deal than being the casino!)
Daly still loves the action and adrenaline. But, he says, “Now if I gamble, I play the $25 slots. If I hit something, I might move up to $100. But I don’t do what I used to do anymore.”
You probably won’t ever need to check your tax returns to count how much you’ve lost at the casino. But your tax return is a great source of information on your overall financial health. And penalties for signing an incorrect tax return are lot greater than signing an incorrect scorecard! That’s why you can’t just file your taxes every year and call it a day. You need a plan to make the most of all your available deductions, credits, and strategies. So call us on 773-728-1500 and we, Chicago CPA are here to keep your taxes out of the rough, and help you avoid those tax bogeys that cost you thousands!