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Old 01-09-2008, 07:03 AM   #301
Bobo Fett
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Re: Canadian Online Poker Tax Thread

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Originally Posted by horrendous View Post
Quick question. i am not very familiar with any tax issues... but if you incorporated, would you be able to use 'rake' from online poker site as a deductible. or is there anyway that RAKE could be used to your advantage, since so much rake gets paid into the sites.
If you claim your profits from each session, you've already deducted the rake.
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Old 01-14-2008, 11:38 AM   #302
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Re: Canadian Online Poker Tax Thread

I had already spoken to a lawyer and a police officer friend before formulating my position.

Their opinion:
1. There is doubt whether you are guiltiy under section 203.
An online only player is not betting in Canada and not directly under Canadian jurisdiction.
The intent of the law was to prevent book-making operations which this is not.
Since the corporation is really only your alter-ego (no other owner, employees or customers) there is doubt you are betting for others "in substance" since you are the only beneficial to the actions. There is no intent to bet for others, you are not in any way holding yourself out to the public or seeking out others.

2. There is no way of anyone knowing of the arrangement. The type of transactions are not mentioned anywhere in any documents or filings so no one is likely to ever know unless they dig into your affairs for other reasons. Even then, there is no evidence that can be used against you other than your own word.

3. The police officer would not want to be laughed out of court. Given the victimless nature of the activity, the difficulty in proving it, the hesitancy of the courts to get involved in it, the attitude that it is not against the morals of society,etc. the chance of a conviction (or even a judge taking it seriously) was so small that it would be worse than a waste of time - it would damage their credibility to spend the time on matters like this.

In essence this is a difficult case to find out about, there is little evidence to go on and even then there are good arguments that you are innocent.
Their opinions (only 2 people) was that you will never see any charges for this brought.

There are plenty of charges brought for gambling (avg of 400-500/yr), but it is so far only for LIVE gaming, like being found ins or running common gaming houses, illegal lotteries or illegal home games (very rare). There is a reason they don't prosecute online cases- they can't prove the "crime" took place in Canada (plus hard to find out about).

Again, I think this set up is only worthwhile for the smallest group of people (20-50 in Canada? - those making greater than 100k /year for at least 2-3 years, probably only from online play, with no other income of any kind who want to build credit, have an RRSP, etc and may want to pursue other businesses later on) so it is really a moot point but I don't really think it can automatically be dismissed as illegal or not worthy of consideration.
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Old 01-15-2008, 12:20 AM   #303
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Re: Canadian Online Poker Tax Thread

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Originally Posted by TorontoCFE View Post
I would declare it only if I had no other source of income and it was over 100k for the year. If you are in that situation , you are more likely to get noticed (especially if you used to have ajob and file returns) and have less case for it being a hobby.
I would incorporate if I was consistantly over 100k and pay myself a salary sufficient to max an RRSP. The balance of the profits I would loan from the corporation to myself at current market rates.
I would lease a car in the corporation name and use it to travel to play.
I'd take advantage of every deduction I could.

If you do this, then you could keep your tax bill to 20k at most and
fulfill all legal obligations.


How would you manage to keep your tax bill at 20K at most? I have been considering the idea of incorporating however my accountant advised against it.

As I understood it If I were to make 100K this year from online poker I would be taxed at the rate of 18% (the current corporate rate)

However If I were to pay myself a salary of say $30K/year I would be taxed $4,435.44 on that $30k (both Federal and Provincial combined)

The leaves 70K that would be taxed at 18%. That leaves about $57,400. The problem is how do I ever use/access that $57k?? It's basicly inaccessible because as I understood it If I ever spent it, it would become salary and then it would be taxed again at the personal income tax rates which defeats the whole purpose of incorporationg to begin with.

There isn't a whole lot of deductions an Online Poker Pro can make unless you want to start claiming expenses that are not really expenses.

Sure you can claim a car but how do you justify it when your commute is from your bedroom to your basement?

I can already deduct part of my morgate, property taxes, utilities etc without having to incorporate

Can you elaborate more on lending yourself money from the corporation?

Is this not taxable? Does it not have to be paid back?
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Old 01-16-2008, 01:01 PM   #304
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Re: Canadian Online Poker Tax Thread

Can anyone answer NL__Fools questions? I guess the obvious one is you don't take that money out of the business until you decide to retire from poker and just continue to pay yourself from the business.
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Old 01-16-2008, 01:45 PM   #305
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Re: Canadian Online Poker Tax Thread

You would make a loan from the corporation to you.
There would be no tax payable to you on that money as long as you paid the corporation a fair rate of interest (which is then income to the corporation).

You can lower your tax bill by paying more out in salary and then making an RSP contribution (though the money is then unavailable). you can have some shares in a spouse's name for income splitting of dividends if they are in a lower tax bracket.
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Old 01-17-2008, 01:50 AM   #306
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Re: Canadian Online Poker Tax Thread

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Originally Posted by TorontoCFE View Post
You would make a loan from the corporation to you.
There would be no tax payable to you on that money as long as you paid the corporation a fair rate of interest (which is then income to the corporation).

You can lower your tax bill by paying more out in salary and then making an RSP contribution (though the money is then unavailable). you can have some shares in a spouse's name for income splitting of dividends if they are in a lower tax bracket.
As I understood it any amount borrowed from the corporation has to be paid back within the corporations next balance sheet (a maximum 1 year) or you have to include it in your personla income tax regardless of the interst.

Is this correct, did this change, or am I misinformed?

If it has to be paid back within the year whats the point in taking it out?

I was also under the impression that the CRA will not accept a series of continual loans that are repayed and then reloaned out again year after year.
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Old 01-17-2008, 05:48 AM   #307
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Re: Canadian Online Poker Tax Thread

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I'm trying to get a credit card limit increase with my bank, but they're telling me that because I'm a student with no official income the $2k I have is already a stretch. I wanted to get a second card in USD, but they made me secure it. Very annoying having 2k tied up in a crappy GIC.

So anyways, if I use their online limit increase form it asks for your income. If I put down the amount I made from poker can that come back and bite me in the ass? Thanks.
I wouldn't do what you're trying to do. The easiest way to increase your credit limit is to just use your credit card and keep paying it off regularly. If you have the money neccessary to warrant a credit limit increase this shouldn't be a problem for you. Just use your card for all your purchases and pay them off right away.

I'm guessing you're fairly young, so it's pretty unrealistic to expect any company to give you a very high limit with what I would guess is essentially no credit history. FWIW whoever told you 2k is a stretch is telling the truth. A lot of students get credit cards with <$1000 limits for their first cards.
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Old 01-17-2008, 05:21 PM   #308
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Re: Canadian Online Poker Tax Thread

Toronto CFE, If you had any advice for my situation It would be appreciated.

I am 27 years old, married and have a full time job, 48 hours/week as a 911 dispatcher, Same job for the last 5 years.

I made 58K last year at my job plus I made an additional $30-35K from poker and rakeback/bonuses.

Do I need to declare my poker income? It's not my sole source of income nor do i rely on it.

I play about 15 hours a week as a hobby
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Old 01-17-2008, 05:31 PM   #309
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Re: Canadian Online Poker Tax Thread

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Originally Posted by 911Operator View Post
Toronto CFE, If you had any advice for my situation It would be appreciated.

I am 27 years old, married and have a full time job, 48 hours/week as a 911 dispatcher, Same job for the last 5 years.

I made 58K last year at my job plus I made an additional $30-35K from poker and rakeback/bonuses.

Do I need to declare my poker income? It's not my sole source of income nor do i rely on it.

I play about 15 hours a week as a hobby
I think it's been pretty well established in this thread that the hobbyist's poker winnings are not taxable in Canada.
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Old 01-17-2008, 06:08 PM   #310
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Re: Canadian Online Poker Tax Thread

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Originally Posted by Bigfoot View Post
I wouldn't do what you're trying to do. The easiest way to increase your credit limit is to just use your credit card and keep paying it off regularly. If you have the money neccessary to warrant a credit limit increase this shouldn't be a problem for you. Just use your card for all your purchases and pay them off right away.

I'm guessing you're fairly young, so it's pretty unrealistic to expect any company to give you a very high limit with what I would guess is essentially no credit history. FWIW whoever told you 2k is a stretch is telling the truth. A lot of students get credit cards with <$1000 limits for their first cards.
Well I've been using the card regularly for 3 years (started with a $500 limit) and I've paid my balance in full in each month. I've also paid back about 5K in loans way before they were due. So I wouldn't say I have no credit history, but I realize it isn't that much.

It's just frustrating that they won't give me an increase with the amount of money I have going through them just because I'm a student.

Edit: It also confuses me because they gave me the 2k limit when I had hardly any money at all over a year ago. Now that I do they won't increase it.

Last edited by -zero-; 01-17-2008 at 06:16 PM.
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Old 01-17-2008, 06:31 PM   #311
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Re: Canadian Online Poker Tax Thread

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Originally Posted by _Towelie_ View Post
I think it's been pretty well established in this thread that the hobbyist's poker winnings are not taxable in Canada.
Actually it's not clear at all, Read Toronto CFE's first 3 or 4 posts on the subject. Does $35k/Year constitute as a hobby?
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Old 01-17-2008, 11:30 PM   #312
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Re: Canadian Online Poker Tax Thread

Quote:
Originally Posted by 911Operator View Post
Toronto CFE, If you had any advice for my situation It would be appreciated.

I am 27 years old, married and have a full time job, 48 hours/week as a 911 dispatcher, Same job for the last 5 years.

I made 58K last year at my job plus I made an additional $30-35K from poker and rakeback/bonuses.

Do I need to declare my poker income? It's not my sole source of income nor do i rely on it.

I play about 15 hours a week as a hobby
NO not at all
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Old 01-18-2008, 03:28 AM   #313
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Re: Canadian Online Poker Tax Thread

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Well I've been using the card regularly for 3 years (started with a $500 limit) and I've paid my balance in full in each month. I've also paid back about 5K in loans way before they were due. So I wouldn't say I have no credit history, but I realize it isn't that much.

It's just frustrating that they won't give me an increase with the amount of money I have going through them just because I'm a student.

Edit: It also confuses me because they gave me the 2k limit when I had hardly any money at all over a year ago. Now that I do they won't increase it.
Hard for me or anyone to comment on it really, it depends how much money you're clearing on your cards. It may seem like a lot to you, but for the bank or whoever issued your CC, it might not be enough to justify an increased limit and the increased risk that goes with it. There really isn't anyway around what I suggested unless you know someone at a financial institution that will just increase your limit by some nominal amount.

The only other option is you can threaten to leave the institution and take your business elsewhere. If you are in fact providing them with any decent amount of business they'll want to keep you around and they probably will bump your limit 500 or 1000 or whatever. This might not be a bad option for you because some financial institutions are a complete pain in the ass, and they each have their own set of rules to follow. Just because Bank A offers you a max of 2000 doesn't mean Bank B won't be able to offer you 3000 or 5000 or whatever.
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Old 01-18-2008, 03:38 AM   #314
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Re: Canadian Online Poker Tax Thread

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Originally Posted by 911Operator View Post
Actually it's not clear at all, Read Toronto CFE's first 3 or 4 posts on the subject. Does $35k/Year constitute as a hobby?
Read post #294

Quote:
Originally Posted by TorontoCFE
I would declare it only if I had no other source of income and it was over 100k for the year. If you are in that situation , you are more likely to get noticed (especially if you used to have ajob and file returns) and have less case for it being a hobby.
Since a) you are employed with a source of income that presumably you pay taxes on and b) presumably do not rely on your poker winnings in any way then you're pretty much the prime example of a person who has a reasonable claim for poker as a hobby. Also you're "only" winning $35 000 a year off poker (not trying to insult you). Like TorontoCFE said you would be a very low priority and it'd be incredibly unlikely you would ever show up on anyone's radar. Based on everything I've read, it wouldnt really be worth it to take you to court and it'd be incredibly unlikely you'd lose your case because of your circumstances (job + amount of winnings + #hrs/week).

Edit - Just want to add, I'm in no way qualified to give you tax/legal/etc. advice and this is just based on what I've been told by accountants and read in this thread and other sources.
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Old 01-18-2008, 03:51 PM   #315
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Re: Canadian Online Poker Tax Thread

Bigfoot is spot on and TorontoCFE's advice is the guideline id follow as well.

I've pretty much decided to pay but I just have this nagging feeling still that maybe I just shouldn't. Seems +EV still to not pay even though im over 100k and no job but I guess im a sucker and the kinda guy who probably will end up paying any ways.
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Old 01-18-2008, 04:13 PM   #316
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Re: Canadian Online Poker Tax Thread

I would definately pay in your case, but I would write off every single item in my office/computer room. If you play live, keep your gas bills, food bills, etc.
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Old 02-01-2008, 02:28 AM   #317
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Re: Canadian Online Poker Tax Thread

Here is a key part of the Pro-line case judgement. IMO this gives us a free pass.

[29] Compulsive gamblers, whether they play lotteries or gaming tables may spend a lot of time and money gambling and they certainly do so with a view to winning. People who go every day to the racetrack devote time and money to this pastime and after a while they may develop a degree of expertise, or at least persuade themselves that they do. Traditionally, however, their gains are not taxed and, more importantly, their losses are not deductible. I start with the judgment of Rowlatt J., one of England's most respected tax judges. In Graham v. Green, [1925] 2 K.B. 37, Rowlatt J. said at page 38:

In this case the appellant was in the habit of betting on horses at starting prices. He did it on a large and sustained scale, and he did it with such shrewdness that he made an income out of it, and it is found that substantially it was his means of living. Under those circumstances he has been assessed to income tax in respect of those emoluments, and hence this appeal.

At pages 41-42, he said:

Now we come to betting, pure and simple. It has been settled that a bookmaker carries on a taxable vocation. What is the bookmaker's system? He knows that there are a great many people who are willing to back horses, and that they will back horses with anybody who holds himself out to give reasonable odds as a bookmaker. By calculating the odds in the case of various horses over a long period of time and quoting them so that on the whole the aggregate odds, if I may use the expression, are in his favour, he makes a profit. That seems to me to be organizing an effort in the same way that a person organizes an effort if he sets out to buy himself things with a view to securing a profit by the difference in their capital value in individual cases.

Now we come to the other side, the man who bets with the bookmaker, and that is this case. These are mere bets. Each time he puts on his money at whatever may be the starting price. I do not think he could be said to organize his effort in the same way as a bookmaker organizes his, for I do not think the subject matter from his point of view is susceptible of it. In effect all he is doing is just what a man does who is a skilful player at cards, who plays every day. He plays to-day, and he plays to-morrow, and he plays the next day, and he is skilful on each of the three days, more skilful on the whole than the people with whom he plays, and he wins. But it does not seem that one can find, in that case, any conception arising in which his individual operations can be said to be merged in the way that particular operations are merged in the conception of a trade. I think all you can say of that man, in the fair use of the English language, is that he is addicted to betting. It is extremely difficult to express, but it seems to me that people would say he is addicted to betting, and could not say that his vocation is betting. The subject is involved in great difficulty of language, which I think represents great difficulty of thought. There is no tax on a habit. I do not think "habitual" or even "systematic" fully describes what is essential in the phrase "trade, adventure, employment, or vocation." All I can say is that in my judgment the income which this gentleman succeeded in making is not profits or gains, and that the appeal must be allowed, with costs.
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Old 02-01-2008, 03:36 PM   #318
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Re: Canadian Online Poker Tax Thread

In a somewhat related question, for non-reporters, how have you handled your roll in regards to mortgage approvals? Do you let the bank know how much you have? What do you use as proof? I could through my roll into an ewallet, but thats a pain.
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Old 02-01-2008, 03:42 PM   #319
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Re: Canadian Online Poker Tax Thread

Even if you are reporting you are going to have a really hard time getting approved for a mortgage. I needed my parents to cosign even with 25% down. If you're not reporting I don't think there is any chance of being approved.
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Old 02-04-2008, 07:52 AM   #320
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Re: Canadian Online Poker Tax Thread

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Even if you are reporting you are going to have a really hard time getting approved for a mortgage. I needed my parents to cosign even with 25% down. If you're not reporting I don't think there is any chance of being approved.
Pretty much what Cassette said. This post actually brought up a point I was going to add after I read Pat's post. If you have no source of income outside of poker and you're clearing 100k+/yr it's probably in your best interest to pay tax regardless of the legality of it because you're going to end up with absolutely no chance of getting approved for any sort of mortgage/loan/etc. if you don't. That's not to say that paying taxes will guarantee anything, it just raises your chance to something >0. Obviously this might not matter to a lot of people in their early 20s, but it's still something to consider if you want to purchase anything significant in the next 5-10 years.
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Old 02-04-2008, 11:42 AM   #321
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Re: Canadian Online Poker Tax Thread

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Pretty much what Cassette said. This post actually brought up a point I was going to add after I read Pat's post. If you have no source of income outside of poker and you're clearing 100k+/yr it's probably in your best interest to pay tax regardless of the legality of it because you're going to end up with absolutely no chance of getting approved for any sort of mortgage/loan/etc. if you don't. That's not to say that paying taxes will guarantee anything, it just raises your chance to something >0. Obviously this might not matter to a lot of people in their early 20s, but it's still something to consider if you want to purchase anything significant in the next 5-10 years.
If you're making 100k/yr+ why don't you just save for 3 years and buy the damn house in cash?
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Old 02-04-2008, 11:50 AM   #322
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Re: Canadian Online Poker Tax Thread

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Here is a key part of the Pro-line case judgement. IMO this gives us a free pass.

[29] Compulsive gamblers, whether they play lotteries or gaming tables may spend a lot of time and money gambling and they certainly do so with a view to winning.....

There is no tax on a habit. I do not think "habitual" or even "systematic" fully describes what is essential in the phrase "trade, adventure, employment, or vocation." All I can say is that in my judgment the income which this gentleman succeeded in making is not profits or gains, and that the appeal must be allowed, with costs.
blah. that is quoting an english case.

Last edited by skier_5; 02-04-2008 at 12:10 PM.
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Old 02-04-2008, 12:28 PM   #323
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Re: Canadian Online Poker Tax Thread

TorontoCFE,

assuming you took advantage of all the loopholes etc, to about what % could you lower your tax rate on 300k, 500k, 1mill, 2mill?
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Old 02-04-2008, 01:03 PM   #324
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Re: Canadian Online Poker Tax Thread

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blah. that is quoting an english case.
Fair enough, but if it was not relevant I doubt this Canadian judge would quote it. I'm not a lawyer but there must be a reason that this case is included in the judgement.
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Old 02-04-2008, 03:05 PM   #325
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Re: Canadian Online Poker Tax Thread

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If you're making 100k/yr+ why don't you just save for 3 years and buy the damn house in cash?
Houses in my area don't come that cheap anymore

So has anybody in here actually used their bankroll as "assets/capital" for a loan or mortgage?

Getting a mortgage isn't the problem for me (already a house owner plus enough household income), its the actual amount I can get.
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