For Americans, we are still in uncertain times regarding AP/UB and, to a lesser extent, Full Tilt. As far as FTP, it seems
we will get back our money...someday. Just don't ask me when; it will be when the remission process completes. As someone who deals with our government on a daily basis, think molasses rolling uphill.
However, there is now some certainty regarding Absolute Poker and Ultimate Bet. The chance of anyone recovering any money from them appears to be equivalent to it snowing in Las Vegas in the summer. Besides the claims of the Department of Justice, there are claims from foreign governments and others. The company and its owners appear to have gone into the ether. The last I heard the DOJ was trying to sell Cereus' software. That might recover enough money to pay the DOJ's fines...but players will get nothing.
Given that it now appears that players won't receive anything, that means there's likely enough certainty to take a casualty loss.
Note that I did not
say a gambling loss; none of the money was lost through wagering; you can only take gambling losses on wagering activities.
Does that mean you should take a casualty loss? I wrote about this at length in my tax blog.
I'm not going to repeat everything here, but I'll summarize:
- Most non-professionals will not
get any tax benefit from taking a casualty loss;
- Professionals can take a casualty loss but need to weigh the risks carefully; and
- Money "won" in 2011 but not taken as income (because it was never constructively received) cannot
be taken as a casualty loss.
Casualty losses are scrutinized by the IRS. Unfortunately, it's an area where many have attempted to take advantage of the IRS, so taking a casualty loss could cause your return to be examined (audited). Do you have the documentation to prove your loss? Do you have the documentation to survive an IRS audit?
Anyone considering taking a casualty loss should discuss this at length with their own tax professional. Your facts and circumstances will determine whether or not taking a casualty loss is the right course of action for you.