Horseplayers who deal with the Internal Revenue Service invariable complain about the agency's vagueness and inconsistency in treating gambing winnings. A bettor could ask 10 auditors the most elementary question about reporting racetrack income and get 10 widely different answers.

The IRS' national headquarters recently attempted to rectify this problem and issued a technical memorandum on the subject of gambling winnings. It is enough to make gamblers yearn for those good old days of ambiguity.

Of all the countless regulations and policies on the IRS books, there may be none so crazy and irrational as this one. It could require a gambler to pay 100 percent, or more, of his profits in taxes. The IRS policy is an affront to common sense, but it is a policy that horseplayers may have to deal with until one of them challenges it in court.

A few months ago I wrote about the plight of a professional harness bettor named Harry, who won a net of $20,000 in a year, filed a letter-perfect tax return and promptly ran afoul of the government. Following the IRS guidelines, Harry had listed his net return, $200,000, as his income, and his total wagers, $180,000 as a deduction. The IRS promptly socked him with a hefty "Minimum tax" assessment.

The minimum tax was created so that rich people who can shelter all their income (with deductions for depreciation and the like) will still have to pay some tax. Clearly, Harry's $180,000 in wagers wasn't a deduction of this sort, and he finally found an IRS officer who agreed that it was preposterous to impose the minimum tax on him. But then the official dug up the official memorandum on the gambling winnings and was forced to tell Harry: Tough luck, buddy.

The memorandum says that even full-time professional gamblers cannot file their taxes the way other businessmen do because they do not have a business. Citing 40 years of court rulings, the IRS says that a person does not have a trade unless he is "offering goods or services" to others. Managing one's own finances doesn't fit that definition.

Since he cannot report his gambling transactions on Schedule C -- Profit or Loss from Business or Profession -- a horseplayer must list his total return from gambling as income on Schedule A, with his wagers as an itemized tax return looked to the IRS computer the same as if he pocketed $200,000 during the year and then took a $180, 0 writeoff for his natural gas leases.

Even if the people who wrote the IRS policy can't grasp the illogic in treating gambling losses as an itemized deduction, they ought to perceive the insane consequences of their ruling. If a bettor wagered $300,000 during the course of a year and make a mere $5,000 profit, then filed his tax return properly, he would owe a mimimum tax of $17,500. In fact, a bettor could lose a significant amount of money and still owe taxes on his "income."

There are some sensible, logical ways to deal with gambling winnings on a tax return. The IRS should tell horseplayers simply to list their net profit as their income; how much he pushed through the windows is irrelevant. If any other type of gambler chose to declare his winnings, he would do it this way. A professional poker player would not add up the value of every chip he pushed onto the table for 12 months and list that astronomical sum as an itemized deduction.

Of course, such a procedure would be far too reasonable for the Internal Revenue Service to consider. The agency will probably cling to its present policy until a horseplayer goes to court to challenge the minimum tax. If there were any sanity left in the world, the odds favoring the horseplayer would be about 1 to 1,000.