TN 198 (08-23)
CITATIONS:
Gambling winnings, lottery winnings and prizes are generally things won in a game of chance, lottery or contest.
Gambling winnings, lottery winnings and prizes are unearned income subject to the general rules pertaining to income and income exclusions.
NOTE: We do not subtract gambling losses from gambling winnings in determining an individual's countable income.
If an individual is offered a choice between an in-kind item and cash, the cash offered is counted as unearned income. This is true even if the individual chooses the in-kind item and regardless of the value, if any, of the in-kind item.
If developing an IRS alert for gambling winnings, lottery winnings or other prizes, see procedure in IRS alert development, SI 02310.048.
If a claimant or a representative payee alleges receipt of gambling winnings, lottery winnings or other prizes, use documentation in the individual's possession to verify the income. If the individual does not have sufficient documentation to verify the income, then do the following:
Obtain the individual's statement either signed or recorded on a Report of Contact page regarding:
date the item was received;
type of item received;
individual's estimate of the value of the item if not cash; and
source of the item.
Accept an individual's statement either signed or recorded on a Report of Contact page an estimate of the value of the item (or actual value, if cash) unless you have reason to doubt the estimate. If you doubt the estimate, determine the item's current market value with an independent source. For the definition of current market value, see SI 00835.020.
Determine the nature of the item and apply the appropriate operating instructions pertaining to income and income exclusions, see SI 00830.525C.
If developing other reports for gambling winnings, lottery winnings or other prizes, see guidance for how to act on reports in SI 02301.010.
SI 00810.020A.2.a Cash income
SI 00815.550 Receipt of certain noncash items
SI 00835.300 Presumed maximum value
SI 00835.020 Current market value
SI 00810.410 Infrequent or irregular income exclusion
SI 00810.420 $20 general income exclusion
SI 02310.048 IRS Alert Development