Nicely understated, dry response.

I analyzed the form back in September. I haven't looked at the final instructions (just the draft instructions) as I'm in the middle of moving, but I doubt anything substantive has changed. Poker accounts aren't impacted by the new form.

However, American who have gone outside of the US to play online poker and have established foreign bank accounts do need to be aware of this form. Though it will likely only impact high-stakes players, for those it does impact it is a particularly onerous IRS form.

-- Russ Fox

Thanks, Russ. Could you post comments on the finals if you get the chance ?

Is the draft trigger for filing an account > $50,000 balance at any time during the year ?

Given that the trigger for ANY US poker player living abroad may be pretty low, and is not confined to poker accounts, it would seem that not only high-stakes players would be impacted. (The easiest practice to avoid triggering onerous reporting may be to leave your nest egg in a US Bank, cashout in <50,000 chunks and send winnings there, report the income, and draw against your US account for your foreign living expenses )

Thanks for any insights.

I saw on Russ Fox's page that there were changes to FBAR requirements again this year. Can anyone clarify, are poker accounts supposed to be claimed on FBAR again this year after not having to do it last year?

Just to clarify since he has a response from December a few posts up, there is an update form last week on his web page about FBAR although it does not mention poker players specifically.

Poker accounts are not foreign financial accounts for either the FBAR or Form 8938.

However, anyone with a foreign financial account--even one with $1--must note that he or she has such an account. This is done by checking a box on Schedule B. This is a new requirement for 2011 tax returns.

-- Russ Fox

http://forumserver.twoplustwo.com/sh...7&postcount=56

I had some questions I wanted to get answered in another thread and since this is the dedicated thread for this topic I thought I would repost here.

In addition to the questions I linked in that thread I was wondering if fees charged by bodog / bovada for processing withdraws / deposits and CC foriegn transaction fees would count as gambling losses. I have an accountant I will be seeing tomorrow but am trying to create a spreadsheet to present her before.

And just to clarify this fbar stuff has me confused and concerned, I just want to make 100% sure my bodog/bovada acct under no circumstances needs to be reported on the fbar or any other document

are you filing self-employed or amateur?

As of today, FINCEN does not consider poker accounts to be foreign financial accounts. That said, I can envision some circumstances where such an account would have to be reported: If the account is linked to a debit or credit card is the most likely. I doubt this is happening; still, it could which is why I can't say there are "no circumstances" where this would need to be reported.

Those don't sound like losses incurred from wagering; they sound like bank charges to me and would be deductible by a professional gambler as such. Since you're seeing an accountant tomorrow, she should be able to look at the specifics of the transactions and give you good advice.


-- Russ Fox

A couple more points of clarification. I will 100% be filling as an amateur. I assume when you say a credit / debit card linked to the acct you mean provided by the site for use with funds in the acct. Obv that is not the case with Bovada / Bodog but I did use a credit card to deposit onto the site (dont think that matters)

It sounds like the fees charged by the credit card company will not be deductible but what about the fees charged by Bovada / Bodog. Likely the same circumstance?

Thanks for taking the time to respond to my questions, its much appreciated.

You report poker winning sessions and losing sessions as gambling income and gambling losses as explained in detail in the US Taxes sticky. These wins and losses are based on sessions played, not withdrawals from your poker site accounts, as explained in that sticky.

If you are a professional player, you can take transaction fees to/from your poker accounts as a business expense on your Schedule C. They would not be gambling losses for amateur players.

Additional question: If you file as an Amateur and you are taking the stance that FTP balance has not been constructively received, do you just subtract that amount from your total winning sessions that is reported in Other Income?

Unfortunately, it's far more complicated than that.

There isn't a direct relationship between a frozen balance on FTP and lack of constructive receipt. Here's an example to illustrate:

Suppose 2010 was the first year I played on Full Tilt, depositing $100. During the year, I played four "sessions." I had two winning sessions of $25 and $75, and two losing sessions of $30 and $60. I did not withdraw any funds in 2010, and claimed on my 2010 return $100 in gambling winnings and $90 in gambling losses.

Now we move to 2011. My FTP balance at the beginning of the year is $110 (initial deposit $100, plus my net winnings of $10). Prior to Black Friday, I play another four sessions. I had two winning sessions of $60 and $70, and two losing sessions of $30 and $50. I make no withdrawals prior to Black Friday, so my account balance is $160 on Black Friday. ($110 starting plus $50 "net" winnings).

The $160 includes the initial $100 deposit made in 2010. A deposit is neither gambling winnings nor gambling losses. Thus, for the 2011 tax year, even if we assume there was no constructive receipt of my gambling winnings of $130 and my gambling losses of $80, I cannot reduce my reportable gambling winnings by my full FTP balance, because a portion of it is attributable to a deposit. If anything, the $100 deposit portion would be a casualty loss, not a gambling loss. And for the 2011 year, because we didn't have certainty regarding the permanence of the loss, it is likely the IRS would disagree with me writing off such amount in that year.

And that's a simple example with four sessions played each year and no withdrawals. It only gets more complex with more activity.

Taxdood beat me to the punch, but the short answer to this is: It will depend on your facts and circumstances. This is not a case of one size fits all.

-- Russ Fox

great "never cashed out scenario" and shows just how tricky this can be

for those of us who had winnings/payouts in 2011, is it fair to assume/use FIFO on payouts?

e.g. Beginning Balance Jan 1 $1000
Winnings $4000
Payouts $3250
Ending Balance $1750

This scenario I assume FIFO, meaning the ending balance (frozen) $1750 is all winnings from 2011 that were never received.

Thoughts?