What is standard when it comes to staking a player from out of state to play in several WSOP events (not the main event), in terms of airfare cost, lodging, food, getting around (renting a car, Uber, etc.)? The actual tournaments we have down.

Tried to post this in Staking, but could not.

Thank you!

Im of the opinion that these costs are born by the stakee, which he or she may use their MU to fund. They would need to have shelter and food where ever they were at anyways.

Food is much cheaper when you can cook. They would need to pay their mortgage or rent, so lodging is still a concern. And of course airfare, and transportation to the events.

Confused about using their MU to fund. Isn't the MU for the staker?

As in, you give the stakee $2k for flights/hotel, and it's added to MU.

As for transportation, stick them in the Gold Coast, and they can walk to the Rio.

I'd have thought it was up to the stakee to pay for associated costs, if they want a shot at the WSOP.

Lets stop discussing in generalities... lets use a fictitious example.

You want to stake Bob Smith to play 4x $1500 WSOP events ($6000 in total). Bob is from New Jersey and needs transportation, lodging, and food to play these events.

Lets use the example above for shizzles and grins.

If the staker is fully backing (paying all buyins) Bob at whatever staker/stakee cut (70/30, 60/40, or 50/50). Then the staker could offer a loan to cover (payable on top of cut) and maybe a slightly favorable staker cut.

If the staker is buying a big piece of Bob, Bob pays for 50% ($3000) of buyins and staker buys the other 50% then Bob should charge the staker a MU (mark up) based on expected ROI in the field. This MU is the stakee's wage for playing the game. So if Bob is fairly competent and trustworthy lets set his MU at 1.2 (20%). Staker would then pay $3600 for 50% of Bob's action. The $600 can be used however Bob wishes... transportation, food, or lodging. However MU should NOT be based on these factors but rather what their expected ROI is on the field.

The info above is general knowledge and each deal is unique. The best deal is the one that is fair to all parties involved.

The standard is the stakee is responsible for travel costs

That said, each deal should be planned and negotiated, and any terms are always on the table. For example, perhaps the stakee wants the staker to make the travel arrangements. They could add those costs into the MU, or simply change the payout arrangement so that the staker gets a few extra points to offset the travel costs.

Let's add another element to this discussion and that is the TAXABILITY of any winnings and how they can be reported. Does anyone have any specific experience with the RIO dealing with IRS Form 5754 at cash out ?

For the non Bean counters that is the " Payers use this form to prepare Form W-2G when the person receiving gambling winnings subject to reporting or withholding is not the actual winner or is a member of a group of two or more people sharing the winnings."

The person receiving the winnings furnishes all the information required by this form to the payer (Rio) and while the CASH is paid out to the "winner" the formal W2-G income reporting is different.

The only statement I can find on the issue is the following

https://forum.wsop.com/chat/wsop-position-on-form-5754

That pretty much says it. As far as the WSOP is concerned there is no such thing as a chop. They pay the guy that's playing in the seat, and nobody else exists.

If that is still the case it complicates the tax reporting BUT it doesn't change the ultimate taxability. You may receive a W2-g for $20,000 win but you legally should not be responsible for the taxation of the full amount. With the IRS though you need to have some fairly convincing proof of the fact (legal written agreement of the split) or you could end up in fairly confrontational situation. Ultimately both parties have to agree to report the FULL prize value.

It does get even more complicated if you are a recreational player vrs a TRUE professional but that is beyond the scope of this discussion.

When winning in that situation I have sent 1099-MISC to my investors and decreased my income proportionally and no issues so far.

That is good to know and yes, that makes sense since you are filing as a professional player and gaming is your occupation. Whether that is self employed Schedule C or a full fledged LLC set up all make a difference in the approach for a true professional. The devil is in the details with the IRS.

I didn't file as a professional.

I am probably guilty of going down a rabbit hole I should not and far afield from the initial OP but ...

Source is 1099-Misc instructions

Trade or business reporting only. Report on Form
1099-MISC only when payments are made in the course of
your trade or business. Personal payments are not
reportable. You are engaged in a trade or business if you
operate for gain or profit.

I am VERY GLAD it has seemed to work out so far but before you do it again I would suggest you seek some professional advice on the issue. If you filed a schedule C it might work but if you were just claiming the winnings as an average joe as Gaming income I am not as confident.

I am a CPA by Profession BUT and it is a huge disclaimer -- I AM NO TAX EXPERT -- My shingle is quite dusty and been in industry for +35 years now.

Again very happy for you that it has had no negative repercussions so far but I would not press my luck with this approach as an non business entity in the future without some solid legal / accounting advice.

I followed the advice of Russ Fox, who is a pretty noted poker tax pro.

The payment can be made in the course of my business without it being made in the course of my profession. The staking cabal operated for gain/profit despite it not being my primary income source.

I have also done this and haven’t heard from irs so I assume they are satisfied

If it was over 7 years ago. They have a huge audit backlog.