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Risky sites, the casualty loss, and possible implications for *future* play post-Black Friday Risky sites, the casualty loss, and possible implications for *future* play post-Black Friday

10-02-2011 , 01:13 AM
Why anyone ever paid taxes pre-cashing out is beyond me
Risky sites, the casualty loss, and possible implications for *future* play post-Black Friday Quote
10-02-2011 , 03:21 AM
Quote:
Originally Posted by memberley
I am an accountant, if you have claimed all of your poker income, yes you can claim the lost money as a casualty loss when you are certain the money is lost. Also you would not claim any winnings until you have collected the money in your possession. You could argue and have a good chance of winning the argument in tax court that until the money hits your US bank account that your winnings would not have to be claimed until then. If you were playing on new years eve, you would have to check your balance at exactly 11:59.59 to determine your wins and losses via the accrual accounting method, which is only for companies. All individuals are under the cash accounting method. Your W2 is always the same as your last paystub that you recieved during the year.... you only pay taxes on stocks and investments when you actually sell them etc.... Same could be argued for online poker winnings, whatever you actually deposited into poker would be your basis for your investment, and whatever you actually recieve from them in your bank account would be the return on your investment. You wouldnt claim $5000 you won on the roulette table and then take a loss of $3000 on the blackjack table on the same casino trip, you would just claim you make $2000 on your trip. Same theory would apply to online poker, you deposit $1000 and cash out $3000, you would claim gambling income of $2000, no matter what you actually have tied up in your poker account, the win is not realized because the money is still at risk.
This is almost entirely wrong. Even to the point that yes ... you actually would claim $5K income from the roulette table and be allowed to take a $3K deduction from the blackjack tables.

The first sentence is correct though, I think. When you are certain the money is lost you can claim it as a casualty loss. However, there is a limit. From memory I think you can only deduct the amount of casualty loss over 10% of your adjusted gross income.

And it is true, however, that you only pay taxes on stocks and some other investments when you sell them. This is a particular exception written into the tax code. It doesn't apply to money you use to play poker on the internet. Putting money on the internet to play poker is not considered to be an "investment" and tax is not figured using a method of your deposit as your basis and your withdrawal as the return as was mentioned by a poster above. There actually are specific rules as to how to report gambling on your taxes. And this thread seems to do a pretty good job explaining it:

http://forumserver.twoplustwo.com/57...ts-faq-740589/



Quote:
Originally Posted by kagame
Why anyone ever paid taxes pre-cashing out is beyond me
Maybe it was because according to the I.R.C. "cashing out" is irrelevant for tax purposes ....

Last edited by Lego05; 10-02-2011 at 03:37 AM.
Risky sites, the casualty loss, and possible implications for *future* play post-Black Friday Quote
10-02-2011 , 04:26 PM
I'm not sure about the advice on different "sessions" for non pro's, IMO if you go to the casino and come back with 2k more than you went with, you claim 2k in gambling winnings. The fact that gambling losses are only allowed if you itemize your deductions makes this deduction nil for about 85% of all tax filers who don't have substantial mortgage interest to make itemizing deductions even an option. This fact would make this different sessions theory very unfair. To get around this, anyone who does have substantial gambling income should just fill out a schedule C and treat it as a business, this way you don't have any gambling income, it is now business income and you can deduct all of your expenses incurred.
Risky sites, the casualty loss, and possible implications for *future* play post-Black Friday Quote
10-02-2011 , 04:40 PM
And another question, for all of those playing on new years eve, how do you do your taxes? What was your balance when the clock struck midnight? I'm sure the people talking about constructive reciept etc are indeed right by law, but in practice who really does this?
Risky sites, the casualty loss, and possible implications for *future* play post-Black Friday Quote
10-02-2011 , 04:41 PM
who really does this? I do, and so do a lot of other players.
Risky sites, the casualty loss, and possible implications for *future* play post-Black Friday Quote
10-02-2011 , 06:23 PM
Quote:
Originally Posted by memberley
I'm not sure about the advice on different "sessions" for non pro's, IMO if you go to the casino and come back with 2k more than you went with, you claim 2k in gambling winnings. The fact that gambling losses are only allowed if you itemize your deductions makes this deduction nil for about 85% of all tax filers who don't have substantial mortgage interest to make itemizing deductions even an option. This fact would make this different sessions theory very unfair. To get around this, anyone who does have substantial gambling income should just fill out a schedule C and treat it as a business, this way you don't have any gambling income, it is now business income and you can deduct all of your expenses incurred.
It's, unfortunately, both true and unfair.
Quote:
Originally Posted by LT22
who really does this? I do, and so do a lot of other players.
Me too.
Risky sites, the casualty loss, and possible implications for *future* play post-Black Friday Quote
10-02-2011 , 08:55 PM
Quote:
Originally Posted by memberley
I'm not sure about the advice on different "sessions" for non pro's, IMO if you go to the casino and come back with 2k more than you went with, you claim 2k in gambling winnings. The fact that gambling losses are only allowed if you itemize your deductions makes this deduction nil for about 85% of all tax filers who don't have substantial mortgage interest to make itemizing deductions even an option. This fact would make this different sessions theory very unfair. To get around this, anyone who does have substantial gambling income should just fill out a schedule C and treat it as a business, this way you don't have any gambling income, it is now business income and you can deduct all of your expenses incurred.
I certainly agree with you that it is unfair. However, it is still correct.

Also, you can't just fill out a Schedule C whenever you want. I do believe that the IRS could challenge you on it and you would have to show that you actually are acting as a professional gambler, rather than it just being a hobby. Also if you file as a professional then you would have to pay a 15% self employment tax.


Quote:
Originally Posted by memberley
And another question, for all of those playing on new years eve, how do you do your taxes? What was your balance when the clock struck midnight? I'm sure the people talking about constructive reciept etc are indeed right by law, but in practice who really does this?
I do it.

The balance in your account is irrelevant for tax purposes. When filing as a hobby you sum all of your winning sessions and report that as income and sum all of your losing sessions and can report that as an itemized deduction. I just use Holdem Manager to filter my results and see the winnings and losses during the year. I also keep a log in Excel as the year goes on, in which I generally use each day as a session for online cash games and each tournament is a session and for live poker each table I play at is a session, etc.

So yea, before midnight on New Year's counts for that tax year and after counts for the next tax year. I've never run into this situation before though. Seriously, who is playing through midnight on New Year's?

Last edited by Lego05; 10-02-2011 at 09:03 PM.
Risky sites, the casualty loss, and possible implications for *future* play post-Black Friday Quote
10-14-2011 , 02:23 PM
Balance in your account is irrelevant period. It's not income until you cash it out. How anyone could argue anything else is beyond me. It is not actual $$$ in a poker account. Player funds are not even remotely segregated in this current climate. The money indicated in your balance MAY NOT EVEN EXIST. There is another side to this, offshore companies do not give records to the IRS.

The day that the US has nationally incorporated sites, where player balance figures are supported by our legal system, is the day I will treat my balance in any poker account as real money.
Risky sites, the casualty loss, and possible implications for *future* play post-Black Friday Quote
10-14-2011 , 04:18 PM
Quote:
Originally Posted by kagame
Balance in your account is irrelevant period. It's not income until you cash it out. How anyone could argue anything else is beyond me. It is not actual $$$ in a poker account. Player funds are not even remotely segregated in this current climate. The money indicated in your balance MAY NOT EVEN EXIST. There is another side to this, offshore companies do not give records to the IRS.

The day that the US has nationally incorporated sites, where player balance figures are supported by our legal system, is the day I will treat my balance in any poker account as real money.

Better hope you don't get audited. While you may not treat your poker account as real money the IRS certainly does. They will find it, you will pay.
Risky sites, the casualty loss, and possible implications for *future* play post-Black Friday Quote
10-14-2011 , 08:08 PM
doesn't this all come down to whether or not money in a poker account would be considered a cash equivalent? I think that there is a strong argument that it would not be considered a cash equivalent in the current climate.
Risky sites, the casualty loss, and possible implications for *future* play post-Black Friday Quote
10-15-2011 , 12:31 AM
Quote:
Originally Posted by t_roy
doesn't this all come down to whether or not money in a poker account would be considered a cash equivalent? I think that there is a strong argument that it would not be considered a cash equivalent in the current climate.
The argument that you could possibly make is that the money won in your poker account has not been constructively received by you. Whether or not it is a good argument may depend on the circumstances and in many cases likely depends on information most of us don't know. For example, maybe money won after Full Tilt was insolvent wouldn't count as income because it was not constructively received. At what point was Full Tilt insolvent? And that is a Maybe. Look into it if you want.



DISCLAIMER: This is NOT legal advice. Any advice I can possibly give is to talk to an attorney if you so desire.
Risky sites, the casualty loss, and possible implications for *future* play post-Black Friday Quote
10-15-2011 , 12:39 AM
Quote:
Originally Posted by kagame
Balance in your account is irrelevant period. It's not income until you cash it out. How anyone could argue anything else is beyond me. It is not actual $$$ in a poker account. Player funds are not even remotely segregated in this current climate. The money indicated in your balance MAY NOT EVEN EXIST. There is another side to this, offshore companies do not give records to the IRS.

The day that the US has nationally incorporated sites, where player balance figures are supported by our legal system, is the day I will treat my balance in any poker account as real money.

Constructive receipt is the rule. You can attempt to dispute your constructive receipt if you wish. However, just the mere possibility of you not getting the funds does not defeat constructive receipt. You need to come up with more than that.
Risky sites, the casualty loss, and possible implications for *future* play post-Black Friday Quote
02-02-2012 , 11:25 PM
administrative bump to prevent archiving of thread
Risky sites, the casualty loss, and possible implications for *future* play post-Black Friday Quote

      
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