*** DOJ/PokerStars/FTP Deal and Player Taxes Containment Thread *** - Poker Legislation

easy_easy_money · 07-31-2012, 03:39 PM

I am in the United States. I made ~$5k on Full Tilt from 2010 to Black Friday. In 2011, I was advised by my tax professional NOT to file my winnings. I regretfully followed this advice. This is obviously a pretty small amount, but I'm still a bit worried about how I should proceed. How much I have on Full Tilt now depends on how phantom deposits and withdraws are handled. On Black Friday, I had ~$1k in my Full Tilt account, a $700 deposit that never left my bank account, and a ~$1400 withdraw that I never received; if those are handled as they should be, I'll have about $1.7k to obtain from the DoJ. What is the recommended course of action seeing as I haven't paid taxes on any of these winnings following the advice of a professional?

repulse · 07-31-2012, 03:50 PM

Quote:

Originally Posted by easy_easy_money

I am in the United States. I made ~$5k on Full Tilt from 2010 to Black Friday. In 2011, I was advised by my tax professional NOT to file my winnings. I regretfully followed this advice. This is obviously a pretty small amount, but I'm still a bit worried about how I should proceed. How much I have on Full Tilt now depends on how phantom deposits and withdraws are handled. On Black Friday, I had ~$1k in my Full Tilt account, a $700 deposit that never left my bank account, and a ~$1400 withdraw that I never received; if those are handled as they should be, I'll have about $1.7k to obtain from the DoJ. What is the recommended course of action seeing as I haven't paid taxes on any of these winnings following the advice of a professional?

Find a new tax professional who understands that income is taxable & amend your 2010 returns

UgotMERKED · 07-31-2012, 04:26 PM

Mods feel free to move this if necessary, was unsure where it would get the highest volume of discussion

Found this passage from Russ Fox's website:

http://www.taxabletalk.com/2011/12/2...ll-tilt-poker/

"The same principle holds in reverse. When there is substantial doubt as to the paying of the funds, you do not have constructive receipt. With Full Tilt Poker and Absolute Poker/UltimateBet, such doubt definitely exists. (Given that the Department of Justice has charged Full Tilt Poker as being a Ponzi scheme, even the US government sees this doubt.) I can’t see constructive receipt existing here. (Note: For anyone who received funds from Full Tilt Poker or Absolute Poker/Ultimate Bet in 2011, there is definitely constructive receipt.) Until the funds are repaid, there likely is no constructive receipt."

What is the best course of action for one to take if they did not file taxes for the funds currently in their FTP account, under the assumption that it was reasonable to believe that constructive receipt had not and would not take place in the future.

Should the player A) amend 2011 tax return or B) file it along with 2012 tax return?

STinLA · 07-31-2012, 04:35 PM

Quote:

Originally Posted by UgotMERKED

Should the player A) amend 2011 tax return or B) file it along with 2012 tax return?

This link (taken from a closed thread in NVG) addresses this question:

Quote:

What does this mean for US players’ taxes?

That income that wasn’t constructively received in 2011 will likely be constructively received in 2012. That means you will need to report your Full Tilt income on your 2012 tax returns. You may need to adjust your fourth quarter 2012 estimated payment.

UgotMERKED · 07-31-2012, 05:18 PM

So, just to make sure there is no confusion - it is within reason to have assumed constructive receipt has NOT taken place

THUS, allowing one to file the received remission funds from the DoJ under their 2012 tax return? and NOT have to file an amended return or have filed at all to begin with...

j9cx18 · 07-31-2012, 05:53 PM

My question is if I deposited $2000 on FTP, but lost $1K, do I have to pay taxes if my remaining balance is lower than the initial deposit and I did not take a withdrawl? Meaning, I did not actually MAKE money or have winnings from gambling?

UgotMERKED · 07-31-2012, 05:58 PM

Quote:

Originally Posted by j9cx18

My question is if I deposited $2000 on FTP, but lost $1K, do I have to pay taxes if my remaining balance is lower than the initial deposit and I did not take a withdrawl? Meaning, I did not actually MAKE money or have winnings from gambling?

the answer to your question is NO

LetsGambool · 07-31-2012, 06:52 PM

Quote:

Originally Posted by UgotMERKED

the answer to your question is NO

Ugh, this isnt necessarily correct.

If you are unsure Read the tax sticky first. Dont take advice from randoms.

EDIT: In fact, its very likely wrong if the person asking doesn't itemize. Read about session-based accounting.

**PokerXanadu** · 07-31-2012, 06:56 PM

Quote:

Originally Posted by UgotMERKED

So, just to make sure there is no confusion - it is within reason to have assumed constructive receipt has NOT taken place

THUS, allowing one to file the received remission funds from the DoJ under their 2012 tax return? and NOT have to file an amended return or have filed at all to begin with...

Yes, it's within reason.

repulse · 07-31-2012, 07:07 PM

Good call making the thread.

Quote:

Originally Posted by j9cx18

My question is if I deposited $2000 on FTP, but lost $1K, do I have to pay taxes if my remaining balance is lower than the initial deposit and I did not take a withdrawl? Meaning, I did not actually MAKE money or have winnings from gambling?

IMO you have no taxable event here. In the tax sticky, there was discussion of the need to attempt to determine what percentage of one's balance represented winnings and what percentage represented deposits, for a US player who took the approach that frozen FTP funds were not constructively receivable in 2011. It's unsettled, but, assuming all play was during one year (2011), a net loser would have to have 100% of their frozen balance be attributable to property rather than winnings.

So the government returning property to you is not income and doesn't trigger any tax.

Disclosure: not a tax professional, just a masochist

CaliBobby · 07-31-2012, 07:28 PM

did stars agree to some parameters with the IRS in relation to the FTP purchase?

TBadr · 07-31-2012, 07:32 PM

Quote:

Originally Posted by easy_easy_money

On Black Friday, I had ~$1k in my Full Tilt account, a $700 deposit that never left my bank account, and a ~$1400 withdraw that I never received; if those are handled as they should be, I'll have about $1.7k to obtain from the DoJ.

wait a minute, if you started with 1k and you deposited $700(phantom) that never left your account, how do you feel entitled to 1.7k? All you are entitled to is 1k! You want an extra $700 that never left your bank account?

STinLA · 07-31-2012, 07:44 PM

Quote:

Originally Posted by LetsGambool

Ugh, this isnt necessarily correct.

If you are unsure Read the tax sticky first. Dont take advice from randoms.

EDIT: In fact, its very likely wrong if the person asking doesn't itemize. Read about session-based accounting.

This was my understanding. Even if you have a net loss, because the IRS does not allow "netting," you can't just say "I had a net loss and therefore had no taxable income and don't have to report anything." Don't you have to itemize and deduct the amount of your losing sessions up to the amount of your winning sessions?

repulse · 07-31-2012, 07:51 PM

Quote:

Originally Posted by STinLA

This was my understanding. Even if you have a net loss, because the IRS does not allow "netting," you can't just say "I had a net loss and therefore had no taxable income and don't have to report anything." Don't you have to itemize and deduct the amount of your losing sessions up to the amount of your winning sessions?

Right, j9cx18 should still have filed appropriately for his play in 2011, I should have mentioned that. Let's say he deposited $2k, had a $500 winning session, and then two $750 losing sessions. Since the $1k remaining in his account is attributable to deposits rather than to net winnings, he should have reported $500 in gambling winnings and $500 in gambling losses (can't report in excess of amount of winnings) on his 2011 taxes, and the freezing of his balance doesn't impact this. There's still nothing for the 2012 return of his deposit under the constructive receipt approach.

This is potentially relevant to UgotMERKED as well. Someone who started playing poker with Full Tilt Poker in 2011 and, after Black Friday happened, decided to just file nothing for that year has made a mistake and has to amend.

ronbo1964 · 07-31-2012, 08:35 PM

Quote:

Originally Posted by TBadr

wait a minute, if you started with 1k and you deposited $700(phantom) that never left your account, how do you feel entitled to 1.7k? All you are entitled to is 1k! You want an extra $700 that never left your bank account?

Um, math fail ... Try again ... If his statements are correct, he has $1700 coming to him ... $1000 + $1400 - $700 = $1700 last I checked ...