You clearly didnt spend the time to read that memo. How they actually calculate the gains and losses is based on the exact method i posted which is EXCLUDING basis.....
Please notice below in the memo you linked how its being calculated.... CLEARLY they are backing out basis.
The better view is that a casual gambler, such as the taxpayer who plays the
slot machines, recognizes a wagering gain or loss at the time she redeems her
tokens. We think that the fluctuating wins and losses left in play are not accessions to
wealth until the taxpayer redeems her tokens and can definitively calculate the amount
above or below basis (the wager) realized. See Commissioner v. Glenshaw Glass
Co., 348 U.S. 426 (1955). For example, a casual gambler who enters a casino with
$100 and redeems his or her tokens for $300 after playing the slot machines has a
wagering gain of $200 ($300 - $100). "
