I'm sure there are lots of you who buy and/or sell pieces of player action for WSOP events. I was wondering how you manage the transactions when people cash in order to avoid double taxation. Does the WSOP or any other venue facilitate it by providing multiple W-2G's ... one to you and one to each of your sponsor(s)?

That seems unlikely. If that doesn't happen, I'm wondering how you get around the double tax implications (legally). When you get your w-2G, its for the full amount of the win. You are liable for the full tax on the win. If you pay your sponsors, you are required to issue a 1099 for any amount over $600, and then they are responsible for paying income tax on that amount... hence the double taxation. If you treat your payments to your sponsors as a "gift", I think the low limit is like $14000 before you have to file any paperwork with the IRS. However, even if you don't file, technically these gifts are supposed to all add up and reduce the estate tax exemption you have when you die. The IRS comes for the money sooner or later.

In any case, clearly a lot of people have experience in this area, and I'm willing to bet some of you actually do it legally. So I'm wondering what mechanism you employ to avoid the double tax.

I was talking it over with an accountant. They didn't have any experience with poker players, but seemed to think the only legal way of doing it, outside of getting individual w-2Gs, is to set up an s-corp and then pay the sponsors with a 1099. The s-corp would not be taxed on the tourney win. Only you would be taxed on the total profits of the s-corp, which are reduced by the payments you make to others... so no double tax. The sponsor(s) would each pay their own income tax on the amount they received from you.

Any thoughts?

There's a whole other forum for this - http://forumserver.twoplustwo.com/57...ought-you-ppa/
Generally your accountant is making it way more complicated that it need be - http://www.taxabletalk.com/2007/05/1...ore-the-rules/

Thanks for the link, Billy. That's exactly the issue I raise. You would think Caesars would be capable of issuing multiple W-2G's. I don't understand their reluctance. Its so like them.

Mods, feel free to move the thread if appropriate.

They don't facilitate chops, why would they facilitate Staking arrangements?