It's time for a tax lawyer to chime in and tell players how and when to account for this loss on their taxes.

I doubt that the owner's of Tusk ran off to Rio.

The majority shareholder's personal net worth is reportedly $620 Million,..not sure if thats US of AUS $$'s.

from Forbes.com


Australia and New Zealand's 40 Richest
#34 Ken Talbot
03.26.08, 10:00 PM ET

$620 million

Keep in mind that your refund could come back with strings attached.

What happens to your friend if you get a 100% refund but it is in the form of a restricted account balance at XYZ Poker? Suppose you need to play a raked hand for every dollar to unblock it? Do you promise to play the hands? Do you deserve a share of the recovered money for doing that extra work? What if you lose some of the money? Or win more? Are you writing an invalid contract that requires you to perform illegal gambling?

What happens if you get 20% of your balance back but the skin also gets money back and pays some rakeback? Who gets the rakeback?

What if you get nothing back from Tusk but MGS belatedly "does the right thing" and gives you a gift of a 100% refund out of their own money?

Do you want to keep this friend?

I'm just saying you need to write this deal very carefully and thoroughly discuss the possible outcomes. Having a good written contract could also make it easier to claim a tax loss on the money you write off by selling at a discount. I don't know what the law is here but in general the IRS is fond of written proof that a deal took place.

I've posted an example of a completed form here:

Form

I think this is the first thing that made me laugh all thread (took 138 pages).

Try to be careful with this. Pursuant to IRS Publication 529, gambling losses can only be deducted to the extent of winnings. For example, suppose you make $50K sports betting in 2008 and lose $60K playing poker, the maximum you can deduct is $50K. If you win $0 in any form of gambling and lose $50K in poker, you will not be able to take a deduction.

The IRS has it set up this way to avoid people blowing through money and then getting to take the deduction if things don't go their way. They have to allow it though up to your winnings because it would bad policy for them to tax on winnings and then disallow deductions on pre-taxed losses.

Also, this will not be considered a loss until the payment is made to you. I would also make sure that you have fully disclosed all of your winnings if you want to take a loss for a significant figure. This is an auto red flag for an audit so make sure you've been paying what's due before making the claim.

If the money's gone no doubt he didn't personally steal it. For all I know he may need his personal assistant to remind him what Tusk is. He could be another victim because he is majority shareholder in a potentially worthless company that may have been grossly mismanaged or just plain looted.

The people who may have "run off to Rio" are the people who actually operated Tusk while all of this was happening. People who were trusted with access to bank accounts, accounting records, software, and everything else.

It doesn't really matter if they were minority owners, paid executives, or a little of each. They were there and if the players' money is missing they are the ones who did it.

According to the 2006 Financial Statement's the company already had a cash shortfall to pay all their debt of over $1 Million.

It appears to be a matter of poor management rather than defalcation.

Tusk actually did something right in getting a liquidator in place quickly and voluntarily. This leads me to believe that fraud likely was not involved, as the liquidator would be the one to uncover and initiate action against directors/employees who defrauded creditors. If they really were creating false accounts, draining players funds into their own bank accounts, etc. they would have skipped town and eventually a liquidator would have been forced on the company by creditors through litigation. None of this changes that it seems like players funds were used for operations and that there is a shortfall - if there wasn't then this would have been resolved by now.


And nh, wordwhiz, vnh.

Question: Is this really a gambling loss?

Question: Are pros and recreational gamblers treated differently in this situation?
Question: If he enters into a firm agreement to sell an $80K account balance for $50K, does that make the timing of his $30K loss immediate? Is this a legitimate way of moving his loss for tax purposes from <whenever the liquidator is done> to 2008?

This is so sick. How do you fill in form 535? I can't fill in **** on that pdf, not with Adobe Reader 8 anyhow. Have no idea how to do that. Is it possible? Took a screenshot of the form and opened it in Photoshop and tried to fill it in that way... My signature looks really funny when using mouse and the Photoshops pencil tool...
Sent my claim anyhow and they will have a good laugh down under when they see it. **** this ****!

I agree with you *if* the responsible Tusk management team actually did this.

It's very possible that Ken Talbot's people figured out something was wrong at Tusk and brought in their own people to clean up. This could have been triggered by the eCOGRA investiation, the MPS revocation of two major rooms, or even their own internal controls. Or maybe management literally did skip town and that exposed the situation.

A corporate troubleshooter could call in a liquidator without any concern for previous management.

IMO the very fact of voluntary liquidation suggests that there was a change of management. Without outside interference it seems likely that that management would have kept up pretenses and cashing their own paychecks.

Question 1 -

Great question. That's where the problem lies and I personally would be reluctant to do it. To demonstrate, suppose I deposited $1 initially and ran it up to $20,000. Since it's been in my account the entire time I probably never paid taxes on it. Therefore, if I receive $10,000 through liquidation the IRS would argue there has been no loss, but rather a $9,999 gain above the initial $1 deposit that I would be taxed on if I decided to withdraw.

I think the important distinction though is that the loss would probably not be recognized as a "gambling loss" and instead would be labeled as a "loss through liquidation" if they let you claim it as a loss at all. That's normally why you need multiple forms of gambling for the deduction to work. I know several attorneys that have classified this type of loss as something different to still receive the deduction. Creative lawyering will be needed, but I personally don't believe the loss was due to gambling.

Question 2 -

By legal standards no, in reality - yes. Recreational gamblers hardly ever report income received in their tax returns. With pros, the amount normally is auto taxed by the regulating authority when the amount exceeds a single threshold. Also, the IRS has the burden of proof to prove tax evasion - which is easy to do when you see someone win a significant amount of money on TV and have the DVD to prove it.

Question 3 -

I would say the answer is the same as in Question 1 above. In this case, I don't believe there is any loss at all. The IRS will measure a gain by subtracting the initial deposit for the 50K and classifying that as the taxable gain.

Damn this new software and the inability to imbed quotes.

Re: Senor Choppy:

There is nothing unethical about trading in claims in a liquidation. I imagine that the private information available to creditors in the liquidation will answer the % discount question.

Re: theMightyZep/stellaw wind:

HI! I understand english like a normal person understand a japan or kina people = DONT UNDERSTAND A **** OF THIS!!

how the **** does micro think i can do all this to get my money back??
fill in form, sending proof? what is it?

I dont understand a **** ...

Can somebody help me? plz i need help! I have done screenshots on my account ....

have ~14k in my account!

Sry for my bad english but i hope u understand me and that someone wants to help me ...

This is a disgrace! Shame on you MG!

I don't believe this is true, but I've seen it posted a couple of times. Please post the document and page number you get that from.

For correct tax advice, and to keep this thread on topic, post tax questions in the Poker Legislation forum.

4.5 Financial Position
The unaudited pro-forma statement of financial position for the Tusk Group at 31 March 2006 is presented below:
Table 9:
$
Current Assets
Cash & cash equivalents 6,468,747
Trade & other receivables 435,354
Other 314,468
Total Current Assets 7,218,569
Non Current Assets
Property plant & equipment 87,090
Intangible assets 1,172,560
Deferred tax asset 57,140
Total Non Current Assets 1,316,790
Total Assets 8,535,359
Current Liabilities
Trade & other payables – players purse* 6,072,337
Trade & other payables – other 1,894,345
Provisions 131,256
Interest bearing liabilities 666,667
Tax liabilities 30,856
Total Current Liabilities
Non Current Liabilities
Provisions 21,962
21,962
Total Liabilities 8,817,423
Net Assets (282,064)
EQUITY
Share capital 5,010
Accumulated losses (287,074)
Total Equity (282,064)
* Player balances held in trust

Total Assets 8,535,359

less

Intangible assets 1,172,560

Assets available for distribution 7,362,799

Total Liabilities 8,817,423

shortfall 1,454,624

Intangible assets were removed from available assets for distribution as these assets usually only have value when you are selling a VIABLE entity.

28/02/2007, Half Yearly Report, p. 13:
Net assets of disposal group classified as held for sale: 72,613

What does an extract of Global Approach's financial statement have to do with Tusk?

The sale of Tusk to Global Approach was unwound in Dec 2006.

Not too sure I understand what that figure means, but hadn't the sale of Tusk been reversed at that stage anyway?

If one reads further throught the Global Approach statements Tusk lent money to Global secured by 2 of the casino's that eventually became Tusk's and have since been acquired by the Casino Rewards Group.

This means in essence Tusk lent real $$'s to Global for assets that the liquidator has since disposed of.

In my opinion this would indicate a deteriorated financial position from the statements of March 2006.

Major tilt!

My money wasn't in my poker account as I did a withdrawal just before all this kicked off, so it was in the Tusk-system. I also have no idea how much money I withdrew so I can't really make a specific claim!

It would be really helpful if one of thoe people who understand all of this "legal stuff" would post a screenshot of how to properly fill out the Formal Proof of Debt Or Claim (Form 535). If you either could take a screenshot of your own form (sensoring your own sensitive information obviously), or just fill out one for a made up John Doe. It's hard for us that don't have english as a primary language to grasp everything.

That's precisely my point: why are you citing an irrelevant, even earlier, figure? We don't know anything about Tusk's current financial situation, and their net worth at the time Global bought them sheds no light on it. So don't post it.

(And if you didn't understand "disposal group classified as held for sale," it's Tusk.)