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Japanese courts face tax expense lawsuits


Japanese courts are facing a series of lawsuits from punters seeking to claim their losing bets as a tax deductible expense after a Supreme Court ruling on the issue earlier this month.

The Supreme Court upheld a decision made by the Osaka High Court last year involving a man who was charged with avoiding 570 million yen ($4.7 million) in income taxes for not declaring horse racing payouts, according to the Japan Times.

According to the ruling, the defendant began buying betting slips in 2004 over the Internet that earned him 3 billion yen in pay outs between 2007 and 2009. The lawsuit focused on whether his losing bets, worth 2.74 billion yen, could be counted as expenses.

The man was sentenced at the District Court to two months in prison for failing to declare 160 million yen in income over the period. But the ruling said he only evaded 52 million yen in taxes, rather than the 570 million yen asserted by prosecutors, thus recognizing the losing betting slips as expenses.

According to the Supreme Court ruling the winnings should be considered miscellaneous income, instead of temporary income as the prosecution claimed. Tax authorities accept larger amounts of tax-deductible expenses for miscellaneous income than for temporary income.

 

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