TN 84 (11-00)
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
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 SI
02310.048, IRS Alert Development.
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 DROC 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 DROC 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. (See SI 00835.020 for the definition of current market value.)
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 at SI 02301.010.
Cash income, SI 00810.020A.2.a
Receipt of certain noncash items, SI 00815.550
Presumed maximum value, SI 00835.300 ff.
Current market value, SI 00835.020
Infrequent or irregular income exclusion, SI 00810.410
$20 general income exclusion, SI 00810.420
IRS Alert Development, SI 02310.048