Quote:
Originally Posted by Gramps
As we've seen recently, just because you have money on a poker site doesn't mean you're ever going to see a penny of it. So...what income tax considerations arise from the UB/AP situation, and possibly FT?
What fact(s) are necessary before we can say that "income" earned the first 3 1/2 months of the year isn't really income?
What fact(s) are necessary before we can take some kind of write off on a poker site balance?
Generally speaking, any related issues, etc.
Regarding the income question, I'll begin with a quote from a
fairly recent post:
Quote:
The doctrine of constructive receipt sometimes requires cash method taxpayers to include an item in income even if no cash, services, or property are actually received in hand during that year. The pertinent Treasury regulation (§ 1.451-2) states that a taxpayer has constructive receipt of income in the taxable year during which it is:
a) credited to the taxpayer’s account;
b) set apart for the taxpayer; or
c) otherwise made available such that the taxpayer may draw upon it during the taxable year if notice of intention to withdraw had been given.
A critical litmus test for constructive receipt is whether the taxpayer has the immediate power to receive the income.
As applied to gambling winnings from sessions on FullTilt or AP/UB from earlier this year (before April 15) that were not actually withdrawn, all those winning amounts are considered income
unless the taxpayer can demonstrate that there was an actual limitation on withdrawals in amount that exceeded the taxpayer's total winnings. I did not personally play on AP/UB, but do recall reading that for some time there was a maximum withdrawal amount per request, and that requests were limited to one per a certain period (a week?). If true, then there may be an argument that the amounts a taxpayer could not withdraw due to the restriction are not considered income.
Regarding the deduction question, which
I wrote about here, there must be a confirmation that the funds will never be returned to players before a loss may be claimed for the taxpayer's frozen funds. Note that for recreational gamblers, the casualty loss is subject to a $100 deductible and is deductible only to the extent it exceeds 10% of the taxpayer’s adjusted gross income.