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Old 03-13-2009, 06:48 AM   #101
pepsi1
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Re: Reporting Poker Sites as Foreign Accounts Catch All

Quote:
Originally Posted by mrick View Post
I don't think the IRS ever uses the word "session". They use the words "transaction", "wins" and "losses". There is some clarification now.

Excerpt:
...A key question in interpreting § 165(d) is the significance of the term “transactions.” The statute refers to gains and losses in terms of wagering transactions. Some would contend that transaction means every single play in a game of chance or every wager made. Under that reading, a taxpayer would have to calculate the gain or loss on every transaction separately and treat every play or wager as a taxable event. The gambler would also have to trace and recompute the
basis through all transactions to calculate the result of each play or wager. Courts considering that reading have found it unduly burdensome and unreasonable. See Green v. Commissioner, 66 T.C. 538 (1976); Szkirscak v. Commissioner, T.C. Memo. 1980-129. Moreover, the statute uses the plural term “transactions” implying that gain or loss may be calculated over a series of separate plays or wagers.

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). This is true even though the taxpayer may have had $1,000 in winning spins and $700 in losing spins during the course of play.
2

Likewise, a casual gambler who enters a casino with $100 and loses the entire amount after playing the slot machines has a wagering loss of $100, even though the casual gambler may have had winning spins of $1,000 and losing spins of $1,100 during the course of play.

http://www.irs.ustreas.gov/pub/irs-utl/am2008011.pdf

Consider the gambler who signs up at Fortune Lounge and gets a $100 Bonus for a $1000 deposit with wagering requirements. (Ah - those were the days). When is the loss measured? After the blackjack, craps, video poker, slots, roulette and all the other games aggregate to meet the wagering requirement, and the tokens are redeemed. How do you like that for a session?

I think it is a fair point about the criminal charges. Keep your records. Pay your taxes. Then as all seem agreed, one is not likely to be prosecuted criminally, but then there is no certainty - other then death and taxes :-).

A bit more guidance for the Schedule C filer as to expenses:

http://www.irs.gov/pub/irs-utl/am2008013.pdf

mrick
Thank you for posting this. I have never seen this document and in my opinion clearly articulates that a session constitutes wins or losses incurred over a period of time such as logging on to the site and logging out. That's great for cash players like me. I'm curious how you tourney players tackle this. Is a session the culmination of all your tourney wins/losses over a four or five hour log-on / log-off session or is each tourney a separate transaction. Either way, thanks MRick. I feel much better about how I filed my taxes now.
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Old 03-13-2009, 11:36 PM   #102
mrick
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Re: Reporting Poker Sites as Foreign Accounts Catch All

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Originally Posted by pepsi1 View Post
Thank you for posting this. I have never seen this document and in my opinion clearly articulates that a session constitutes wins or losses incurred over a period of time such as logging on to the site and logging out. That's great for cash players like me.
My pleasure - but not my credit. This was brought to light by a much better practitioner than me on another board. I was just lucky enough to see it. I was happy to pass it along.

mrick
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Old 03-14-2009, 12:52 AM   #103
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Re: Reporting Poker Sites as Foreign Accounts Catch All

interesting
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Old 03-15-2009, 04:02 AM   #104
Dimon
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Re: Reporting Poker Sites as Foreign Accounts Catch All

Russ,

Please correct me if I am wrong, but currently the only law on the books pertaining to the definition of what constitutes a financial institution is the law defining the types of domestic entities which are considered to be financial institutions (31 CFR 103.11).

Wouldn't the government have to put in place a similar law dealing with foreign institutions?

The clarification you were given, in regard to online gaming sites being considered financial institutions, was provided to you upon your request - but that is different than an actual law existing to that effect? No?

On your site, you made a post a few years ago, containing the following statement:
Quote:
The IRS hasn't pressed the point, but if they want to, they could classify all online casinos as financial institutions.
I would assume this classification would have to be made letter of the law, as opposed to something provided upon request to individuals such as yourself that happen to be closely in touch with the issue.

If you could, please address the points above.

Thank you for your time and contribution to this discussion.

D.
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Old 03-15-2009, 11:33 AM   #105
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Re: Reporting Poker Sites as Foreign Accounts Catch All

My accountant told me last year that it was possible that poker accounts could be considered part of FBAR, and I disclosed mine, going back 7 years (pretty sure that is the statute of limitiations on FBAR).

I called the IRS and asked an agent if I was going to have any problems with reporting the old accounts late. She told me something like, "If you're coming to us and declaring them instead of us coming after you, it won't be a problem." I wouldn't call it an official IRS ruling, but it seems reasonable. I did not get audited.
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Old 03-15-2009, 03:14 PM   #106
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Re: Reporting Poker Sites as Foreign Accounts Catch All

I called up epassporte to get their mailing address and this is what they gave me-

333 Washington Boulevard, Suite 345
Marina Del Ray, CA 90290. USA

epassporte is not based out of USA but looks like they have an office here and this is what they shared..can this address be used for FBAR filing purposes for epassporte?
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Old 03-30-2009, 06:06 PM   #107
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Re: Reporting Poker Sites as Foreign Accounts Catch All

No offense to you, Russ, who provides some good advice, but i have to comment on your fear mongering and being a drama queen.

I take what you say with a grain of salt... here's why: you posted on your blog at one point that filing the FBAR would result in an automatic audit of the corresponding 1040. Those were your exact words.

Based on this, i hired one of the best experts in the world on the FBAR, to do the form for me. He has never had a client audited who filed the FBAR, and i havent been audited either.

So when you say that people might get fined or go to jail, if they havent filed the FBAR for an offshore poker account, i just dont believe you. I agree with the other posters that if someone has paid their taxes, and since there has been no official guidance in this area, that the IRS wouldnt even impose the non-willful 10k penalty (let alone jail time or the willful 100k penalty). Again, no offense, but i disagree with you on this.

ps- obviously the situation is different if someone had used a Neteller type intermediary account, which probably does require the TDF 90-22.1
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Old 03-30-2009, 07:01 PM   #108
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Re: Reporting Poker Sites as Foreign Accounts Catch All

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Originally Posted by sports_quant99 View Post
...i hired one of the best experts in the world on the FBAR, to do the form for me...
How did you determine that the person you had do your form was "...one of the best experts in the world on the FBAR..."?
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Old 03-30-2009, 07:08 PM   #109
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Re: Reporting Poker Sites as Foreign Accounts Catch All

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Originally Posted by sba9630 View Post
How did you determine that the person you had do your form was "...one of the best experts in the world on the FBAR..."?
It's called due diligence. His name is Vern Jacobs. He specializes in offshore taxation.
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Old 03-30-2009, 07:14 PM   #110
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Re: Reporting Poker Sites as Foreign Accounts Catch All

I may stand corrected. Did they actually change the definition of offshore financial acct starting for tax year 2008? This thread seems to say so:

http://www.taxalmanac.org/index.php/...m_TD_F_90-22.1

I'll need to read the relevant cite: Title 31, chapter 53, section 5312 - defines financial institution, and also check out the instx for the FBAR form. Interesting, and i'll eat crow if i'm wrong.

In any event, this may provide clarity for the years calendar 2007 and earlier, so that for those years, no FBAR required for offshore poker/sports accounts. At least that's my legal theory at this point.

*-usual disclaimer - as always, if you used Neteller, i think most all of us would agree that does trigger FBAR requirements
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Old 03-31-2009, 01:35 AM   #111
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Re: Reporting Poker Sites as Foreign Accounts Catch All

Well, let me say - I have filed the FBAR for 5 years running (including poker sites this year), and am yet to be audited. I agree with insiderman that failing to file it on it's own is unlikely to generate an audit, but it's something that they'll gladly pound on you if they find anything wrong (willful or not) with your regular return in an audit.
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Old 03-31-2009, 09:01 PM   #112
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Re: Reporting Poker Sites as Foreign Accounts Catch All

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Originally Posted by Punker View Post
Well, let me say - I have filed the FBAR for 5 years running (including poker sites this year), and am yet to be audited. I agree with insiderman that failing to file it on it's own is unlikely to generate an audit, but it's something that they'll gladly pound on you if they find anything wrong (willful or not) with your regular return in an audit.
Interesting. So are you saying that for years 2004, 5, 6, and 7, you had money in poker sites, yet left those poker sites off your FBAR? (it sounds like you probably had other reasons that required the FBAR for those years, like Neteller or another e-wallet).

And then for 2008 (for the FBAR due June 30, 2009), you have now included poker sites? (was this based on Russ Fox's new blog post, or something else)

With respect to insiderman's statements, he's right that failing to file the FBAR per se would not generate an audit, unless there was some sort of 'matching program' e.g. if the IRS ever matches their 'Neteller list' with 1040's.

And they'll only 'pound on you' if you were clearly required to file the FBAR, and didnt, which they might not even know in an audit (e.g. if a site shuts down and you cant get records of your balance through the year)
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Old 03-31-2009, 11:33 PM   #113
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Re: Reporting Poker Sites as Foreign Accounts Catch All

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Originally Posted by sports_quant99 View Post
Interesting. So are you saying that for years 2004, 5, 6, and 7, you had money in poker sites, yet left those poker sites off your FBAR? (it sounds like you probably had other reasons that required the FBAR for those years, like Neteller or another e-wallet).

And then for 2008 (for the FBAR due June 30, 2009), you have now included poker sites? (was this based on Russ Fox's new blog post, or something else)
Your description is correct - I live outside US and have had to file multiple foreign bank accounts, but have never filed poker accounts until this year. This may, however be because I have Russ do my taxes
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Old 03-31-2009, 11:56 PM   #114
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Re: Reporting Poker Sites as Foreign Accounts Catch All

http://www.downloadpipe.com/Kolyma-C...r-1079871.html


not sure why this is differnt from what others have posted
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Old 04-01-2009, 03:28 PM   #115
JoeSchmo
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Re: Reporting Poker Sites as Foreign Accounts Catch All

Anyone have the info needed to file for Cake Poker?
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Old 04-01-2009, 04:00 PM   #116
Kevmath
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Re: Reporting Poker Sites as Foreign Accounts Catch All

Russ Fox has the Cake Poker address, as well as several other online gambling sites addresses at: http://www.taxabletalk.com/posts/1236729554.shtml
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Old 04-01-2009, 04:06 PM   #117
JoeSchmo
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Re: Reporting Poker Sites as Foreign Accounts Catch All

Thanks Kevmath, you're a wealth of information as always.

And thanks Russ for the info and helping us out here.
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Old 04-01-2009, 06:55 PM   #118
ChipLeeder
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Re: Reporting Poker Sites as Foreign Accounts Catch All

Quote:
Originally Posted by sports_quant99 View Post
I may stand corrected. Did they actually change the definition of offshore financial acct starting for tax year 2008? This thread seems to say so:

http://www.taxalmanac.org/index.php/...m_TD_F_90-22.1

I'll need to read the relevant cite: Title 31, chapter 53, section 5312 - defines financial institution, and also check out the instx for the FBAR form. Interesting, and i'll eat crow if i'm wrong.

In any event, this may provide clarity for the years calendar 2007 and earlier, so that for those years, no FBAR required for offshore poker/sports accounts. At least that's my legal theory at this point.

*-usual disclaimer - as always, if you used Neteller, i think most all of us would agree that does trigger FBAR requirements
I don't believe that the definition of a foreign bank account was changed with the form revision. I believe that the penalties were increased and the information reported on the form was increased.
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Old 04-01-2009, 08:31 PM   #119
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Re: Reporting Poker Sites as Foreign Accounts Catch All

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Originally Posted by ChipLeeder View Post
I don't believe that the definition of a foreign bank account was changed with the form revision. I believe that the penalties were increased and the information reported on the form was increased.
Thanks ChipLeeder ... i didnt see any change in penalties... where did you see this? Thanks
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Old 04-05-2009, 01:01 PM   #120
joeker
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Re: Reporting Poker Sites as Foreign Accounts Catch All

Just wondering what people are putting in for the "account type" when reporting poker accounts

Options are: "bank account" - "securities account" and "other" which you must specify
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Old 04-11-2009, 01:32 AM   #121
Stinky Johnson
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Re: Reporting Poker Sites as Foreign Accounts Catch All

`

Last edited by Stinky Johnson; 04-11-2009 at 01:39 AM.
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Old 04-14-2009, 10:55 AM   #122
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Re: Reporting Poker Sites as Foreign Accounts Catch All

Basically what it seems like is going on in this thread it that since online poker is such a grey area when it comes to taxes, a lot of things have not really been established clearly and left open for interpretation. I've talked to 5 CPA's who have all said reporting what's actually in the account would be silly. Isn't everyone always recommending to "talk to a professional" ? Is that supposed to mean "go keep talking to professionals until you find one that gives you the same advice you're getting on this forum" ?

If most CPA's you go talk to are going to tell you you don't have to report it then clearly that means the vast majority of people playing poker online when they go talk to their CPA's are NOT reporting it, just the select few who talk to Fox.

Hell, one CPA told me that if the IRS did come banging on your door later on you could just tell them you didn't view the money you put into the account as real money because you hadn't cashed it out yet and it's being used just to play a game... you just viewed it as chips to play poker with for fun on the internet as a skill game and then when cashing it out you decided to pay your taxes.

I'm not saying he's right specifically but it just goes to show you that recommending people talk to professionals doesn't mean you're going to have them tell you what you hear here. Vast majority of the time you'll hear something different. So does that mean people should just listen to the posters of 2p2 as the authority on paying taxes? If you believe that then you should mention it instead of sending people off to professionals. The large % of them disagree with what you hear here. Shouldn't that also be a telling sign that the laws are unclear and ambiguous?

I think the bigger thing though is that people who have been audited said that it didn't even come up... so if people have actually gone through the audit process and found it wasn't even ask about isn't this kind of like the one poster said where you're reporting to them about the money stuffed under your mattress? Whatever happened with neteller? Didn't the DOJ get their records? If so why didn't all the people who had more than 10k in their get audited? Plenty of players on this forum had money in there... a large %.

Also it kind of seems like Russ constantly mailing them about it is bringing it to their attention and could induce them to actually come out with an official ruling on it and start looking into it, whereas if he hadn't the IRS really wouldn't have clarified things. If they never made it clear whether you should report what's in the poker account how are they going to haul people off to jail... but seems like egging them on and mailing them about it is just going to make them clarify it.

The main points though are that 99% of people who do make money gambling online, when they go talk to their CPA (as always recommended by people here), they will not be reporting the amounts in the account nor will they be filing correctly (many professionals claim you are fine just netting the amount you make online and reporting it as winnings). If you think that's horrible advice well you should look in the mirror then because you're the one recommending people to talk to a professional and follow their lead. Maybe you should just give them tax advice yourself if you think the professional they are talking to has no clue... why even recommend it in the first place.
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Old 04-14-2009, 12:51 PM   #123
LetsGambool
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Re: Reporting Poker Sites as Foreign Accounts Catch All

CPA's are notoriously terrible when it comes to gambling income.

You should read the case law on netting and contact the IRS yourself with these questions. Its not really unclear that you can't net winnings.

While you are 100% correct no one is going to jail for not filing an FBAR for poker sites (not without other tax issues), the IRS doesnt typically work on a "oh you didnt know, so that's OK" basis.

If you talk to a tax professional and are comfortable with the risk of not reporting, fine, but being angry at Russ for trying to clarify things with the IRS and for telling you to talk with your own tax professional (which, I believe, he is required to do by the ethical code of conduct of his profession) is silly
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Old 04-14-2009, 01:38 PM   #124
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Re: Reporting Poker Sites as Foreign Accounts Catch All

good post boobies..
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Old 04-14-2009, 03:55 PM   #125
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Re: Reporting Poker Sites as Foreign Accounts Catch All

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Originally Posted by jeffpoker323 View Post
good post boobies..
Very good point. 99% of accountants don't know anything about filing as a professional gambler. 2p2 is one of the best resources for this information.
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