AICPA Asks Treasury for Gambling Losses Guidance After 2025 Tax Law

The American Institute of CPAs asked the Treasury Department and the Internal Revenue Service this week for rules on how taxpayers substantiate gambling gains and losses, a request that follows the 90% cap on loss deductions that took effect for 2026.

The AICPA gambling losses guidance request came in a comment letter on the proposed regulations Treasury and the IRS issued in April under Section 165(d) of the Internal Revenue Code. The Institute said the proposal does not address how taxpayers should measure, substantiate and report wagering results.

For preparers, the gap is practical. Clients with online sportsbook accounts, casino loyalty cards or racetrack activity arrive in February with statements, not logs, and the rules on what counts as proof are still unwritten.

What the AICPA gambling losses guidance asks for

The letter makes three requests. Each is narrow and technical.

• Define a gambling session for measuring wagering gains and losses, with a corresponding safe harbor.
• Identify which records adequately substantiate wagering gains and losses under the session method. The AICPA wants confirmation that account histories, win-loss statements, player activity summaries and similar records furnished by gaming operators may be relied on.
• Apply the session method to every type of wagering, including table games, horse racing, electronic gaming and other wagers.

The session method nets wins and losses over a defined period of play, so a taxpayer reports the result of the session rather than every individual bet. The letter does not propose a specific session length. It asks the agencies to set one.

Scott Klein, senior manager of AICPA tax policy and advocacy, said in a statement:

“The growth of online and mobile wagering and the new 90% limitation wagering losses have made clear, practical rules for reporting gambling gains and losses more important than ever. Without clear rules, taxpayers can face higher taxable income, reporting discrepancies and uncertainty over how to substantiate their activity.”

Scott Klein, Senior Manager, Tax Policy and Advocacy, AICPA

The 90% cap in Section 165(d)

The One Big Beautiful Bill Act, Public Law 119-21, signed on July 4, 2025, rewrote the wagering loss rule. Under Section 165(d), the deduction equals 90% of the losses in the taxable year, and it is allowed only to the extent of gains from wagering in that year.

The change applies to taxable years beginning after December 31, 2025. Before it, an itemising taxpayer could deduct losses up to the full amount of winnings.

The effect is that a taxpayer who breaks even can still owe tax. A client with $100,000 of winnings and $100,000 of losses deducts $90,000 and reports $10,000 of taxable income, with no economic gain behind it. The deduction is still claimed only by taxpayers who itemise.

That arithmetic explains why measurement matters more than it did. When losses are worth only 90 cents on the dollar, every dispute over which losses count carries a tax bill.

What the IRS proposed in April

Treasury and the IRS released the proposed regulations, REG-113229-25, on April 16, 2026. They amend the Section 165 regulations to reflect the 90% limit and also raise the information reporting threshold for certain payees from $600 to $2,000, indexed for inflation, according to the Federal Register notice.

Comments were due June 16. The IRS held a public hearing on July 17, where speakers called the 90% limit unfair to honest gamblers and urged repeal. Repeal is a matter for Congress, not for the agencies, and the AICPA letter does not ask for it.

The Institute instead took the rule as written and asked how to apply it. That is a more modest request, and arguably the one the agencies can answer without legislation.

Why records are the open question

The IRS has long accepted documentation such as statements of actual winnings from the gambling establishment as evidence of winnings and losses. It has not said how session-level records from an app or loyalty programme fit into that framework.

The only session safe harbor the agency has floated is Notice 2015-21, a 2015 proposal limited to electronically tracked slot machine play. It defined a session as running from a gambler’s first wager on a game to the last wager on that game before the end of the calendar day. It said nothing about sportsbooks, table games or racing.

That leaves a split. Operators produce annual win-loss statements, which can mask the timing of wins and losses within the year. Preparers must decide whether to net by session, by day or by year, and whether a statement alone will survive an examination.

The AICPA wants gambling losses guidance that answers both questions in one place, so a client’s operator statement carries a known weight.

What preparers can do before guidance arrives

No final rule or notice provides the guidance the AICPA requested on gambling losses as of November 13, 2026. Firms with gambling clients are working with the statute and the April proposal.

The firm-side housekeeping is routine. A tax preparation engagement letter can state that the client is responsible for supplying wagering records and that the firm will rely on them. Clients with large swings in wins and losses are candidates for a year-end tax planning letter before December 31, when there is still time to gather operator statements.

Firms that need to explain the 90% cap to a wider client list can use the tax law change client letters pack. Agency capacity is also a constraint: the IRS has told the AICPA that staffing cuts will strain the 2027 filing season, which makes a quick answer on gambling records less likely.

What to watch on gambling losses guidance

The proposed regulations are not final. Treasury and the IRS have not said when they will publish final rules or whether those rules will take up the AICPA’s session and substantiation requests.

The 2026 returns, due in April 2027, will be the first to carry the 90% limit. Whether the agencies answer the AICPA before then will decide how much of the substantiation burden preparers carry in that filing season.