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TMFTaxes, perhaps I am beating a dead horse here, but the question has come up several times in the past so perhaps it bears bringing up again explicitly.

Suppose my saintly and widowed mother has mortgage payments of $800 a month, of which $600 are interest. She can itemize and she is in the 15% bracket. Since she is saintly, I give her $10,000 a year. She spends $9600 of this on the mortgage, and $400 on bingo tickets. The bingo tickets produce losses only.

Then, if her itemized deductions produce a refund which is say 15% of $600 a month or $1080 for the year, and Mom gives that back to me, the transaction is clean, isn't it?

But if I just give Mom $400 for bingo and write the mortgage checks myself, no deduction can be claimed.
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