The C.S.C., Prize Money, and 1099 tax forms

I have had many discussions with fellow shooters about the developments involving 1099's received from the Cardinal Center.
While I understand there is probably no legal way to avoid them. And I understand the legal ways (expense write offs) to offset the tax. But the prize money we receive is overwhelmingly, para-mutuel.
So, my tax accountant informed me that the issuer (The Cardinal) was actually able to use the money represented on the 1099 as a tax write off.
So does anyone on the forum know if that is true? If so, how could they claim para-mutuel betting funds as a write off? After all they themselves are not paying anything.

 

Why don’t you ask your tax accountant? He’s the one that told you they could do it…

 

Well 10 point, I am going to nail him down on that today sometime. I thought maybe there were some other knowledgeable people who could explain how someone might get away with it.
I guess you are not one of those. But thank you anyway.

 

I am not a tax accountant, though I have owned multiple businesses. In any event, I queried chatGPT (AI) for the answer. Here is what it stated:


Trap shooting winnings are generally considered taxable income and would typically be reported on a Form 1099-MISC if they exceed $600 in a year.

Are Trap Shooting Winnings Parimutuel?
No, trap shooting winnings are not considered parimutuel betting (which applies to horse racing, dog racing, and similar pool-based betting systems). Instead, they are treated as prize winnings from a competition.

If your winnings are substantial, the event organizer may issue you a Form W-2G (used for gambling winnings), but in most cases, 1099-MISC is the correct form for reporting. You are responsible for reporting all winnings on your tax return, even if you do not receive a 1099.

 

Anything over 6 hundo, you gotta pay uncle Sammy. Just as if you won at the casino

 

If the winnings are reported on a 1099-Misc, can't the expenses to generate that income also be deductible?

 

Let me see if I can be more clear on the question.
Does the entity filing the 1099-misc with the IRS, get credit as a tax write off of said funds??
Because in these cases the funds being won are not provided by the entity, in this case The C.C.
The the prize money belongs to and is contributed by the shooters. It is a "pool" type of system. Regardless of wether AI calls it para-mutuel or not.

 

I was finally able to engage my tax accountant on the subject today. The short answer is it depends on how the business is set up. For example, if they are a nonprofit of some sort and they take funds into their accounts and redistribute them, the 1099 would be the way they show it on their tax forms. So it may be a requirement.
My understanding is that if they are not some kind of an exempt business entity, then they may not even be required to issue a 1099. And regardless of what the business type is, it would be fraudulent if they were indeed benefiting from it. There is also the possibility, that they are not required to do it at all because it is not their money that is being distributed.