View Full Version : Is rakeback taxable?
FatalError
10-01-2005, 04:43 PM
For the standard tax reporting professional, is your rakeback considered a "gift" and therefore not taxable as income? what about deposit bonuses?
These add up to signifigant (tens of thousands of dollars) amounts of money at years and and not having to declare them would be a godsend
dogmeat
10-01-2005, 04:46 PM
[ QUOTE ]
For the standard tax reporting professional, is your rakeback considered a "gift" and therefore not taxable as income? what about deposit bonuses?
These add up to signifigant (tens of thousands of dollars) amounts of money at years and and not having to declare them would be a godsend
[/ QUOTE ]
Why do you guys insist on trying to get around paying taxes?
Yes, it is taxable.
Dogmeat /images/graemlins/spade.gif
iceman5
10-01-2005, 04:47 PM
You could always call the IRS and ask them. Short of doing that....yes, its taxable.
jman220
10-01-2005, 04:53 PM
[ QUOTE ]
For the standard tax reporting professional, is your rakeback considered a "gift" and therefore not taxable as income? what about deposit bonuses?
These add up to signifigant (tens of thousands of dollars) amounts of money at years and and not having to declare them would be a godsend
[/ QUOTE ]
They definitely do not qualify as a gift. They definitely are taxable.
teddyFBI
10-01-2005, 05:17 PM
I posted in one of the other 100 threads on this topic that i was of the firm belief that RB was NOT taxable -- I subsequently got flamed hard, although I stand by my position.
I won't make any more posts in this thread; search for the other threads on this topic if you care to see my take on it.
Bring on the flames.
yanicehand
10-01-2005, 05:24 PM
[ QUOTE ]
Why do you guys insist on trying to get around paying taxes?
[/ QUOTE ]
Ya what a mind boggler. Why would someone try and find a way to not pay all of 60,000$+ of money to the government? What are these people, retarded?
Paul2432
10-01-2005, 05:49 PM
[ QUOTE ]
[ QUOTE ]
Why do you guys insist on trying to get around paying taxes?
[/ QUOTE ]
Ya what a mind boggler. Why would someone try and find a way to not pay all of 60,000$+ of money to the government? What are these people, retarded?
[/ QUOTE ]
Totally agree. Everyone should strive to pay the legal minimum in taxes, and not a cent more.
Paul
Rasputin
10-01-2005, 05:51 PM
[ QUOTE ]
[ QUOTE ]
Why do you guys insist on trying to get around paying taxes?
[/ QUOTE ]
Ya what a mind boggler. Why would someone try and find a way to not pay all of 60,000$+ of money to the government? What are these people, retarded?
[/ QUOTE ]
Quite possibly, yes.
The real question is why do they think they're so special that their income should be tax free when every other working stiff pays theirs?
Just pay your damn taxes and be glad you have a job you like.
Freudian
10-01-2005, 06:03 PM
[ QUOTE ]
I posted in one of the other 100 threads on this topic that i was of the firm belief that RB was NOT taxable -- I subsequently got flamed hard, although I stand by my position.
I won't make any more posts in this thread; search for the other threads on this topic if you care to see my take on it.
Bring on the flames.
[/ QUOTE ]
If it wasn't taxable then pretty much anything with sales tax on would be sold with the store providing a "gift" to the buyer later, to minimize taxes.
ace_in_the_hole
10-01-2005, 06:20 PM
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
Why do you guys insist on trying to get around paying taxes?
[/ QUOTE ]
Ya what a mind boggler. Why would someone try and find a way to not pay all of 60,000$+ of money to the government? What are these people, retarded?
[/ QUOTE ]
Quite possibly, yes.
The real question is why do they think they're so special that their income should be tax free when every other working stiff pays theirs?
Just pay your damn taxes and be glad you have a job you like.
[/ QUOTE ]
Yes. A perfect combination of laziness and intelligence should be rewarded monetarily (sp?). Meh. Just venting after loosing on the bubble with flopped set to runner runner flush.
teddyFBI
10-01-2005, 07:52 PM
[ QUOTE ]
[ QUOTE ]
I posted in one of the other 100 threads on this topic that i was of the firm belief that RB was NOT taxable -- I subsequently got flamed hard, although I stand by my position.
I won't make any more posts in this thread; search for the other threads on this topic if you care to see my take on it.
Bring on the flames.
[/ QUOTE ]
If it wasn't taxable then pretty much anything with sales tax on would be sold with the store providing a "gift" to the buyer later, to minimize taxes.
[/ QUOTE ]
OK, i lied: THIS will be my last post in this thread.
RB isn't taxable for the same reason that mail-in-rebates aren't taxable as regular income.
Yes, I've heard the counterarguments. I disagree with them.
FatalError
10-01-2005, 08:54 PM
Ok then what about bonuses? those should be non taxable for sure then especially when you don't have to play to earn some of them, i.e. the royal flush club bonuses on empire
jman220
10-01-2005, 09:38 PM
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
I posted in one of the other 100 threads on this topic that i was of the firm belief that RB was NOT taxable -- I subsequently got flamed hard, although I stand by my position.
I won't make any more posts in this thread; search for the other threads on this topic if you care to see my take on it.
Bring on the flames.
[/ QUOTE ]
If it wasn't taxable then pretty much anything with sales tax on would be sold with the store providing a "gift" to the buyer later, to minimize taxes.
[/ QUOTE ]
OK, i lied: THIS will be my last post in this thread.
RB isn't taxable for the same reason that mail-in-rebates aren't taxable as regular income.
Yes, I've heard the counterarguments. I disagree with them.
[/ QUOTE ]
Even if your argument were correct, and rakeback wasn't taxable as separate income (and it is) for the same reason as mail in rebates, then you would still have to add your rakeback to your total profit and then just pay taxes on the profit. Do you see why? For Example In one session, you lose $500, and Earn $750 amongst your tables, giving you a profit of $250. Part of that $500 loss was money that you paid in rake, lets say $25. If you're getting the $25 back, then it wasn't a loss, and you would have to report a profit of $275 so you are still paying tax on the money you paid in rake. You basically have to pay tax on everything you earn. You have already paid the tax on a rebate because it is money that you spent from your income which was already taxed. This is not true of rakeback, which has not been taxed. You can't have a realization event that isn't a gift and not pay taxes, thems the breaks.
FatalError
10-02-2005, 12:09 AM
you seem to know your stuff, what about a deposit bonus?
jman220
10-02-2005, 12:25 AM
26 USC §61: Gross income includes all income from whatever sources derived.
Yes, Bonuses are income, and they are taxable.
If rakeback is not taxable, then rake is not deductible.
So, if you won $10,000, but paid $5,000 in rake, you should pay taxes on the entire $10,000. Because you think rake doesn't count, for some reason.
Feel free to try to convince the IRS that the money you made doesn't count as income, but all the money you paid does count as deductions, though. The IRS will certainly let you get away with anything, they're terribly nice and reasonable and want to see you paying as little tax as possible.
teddyFBI
10-02-2005, 04:18 PM
God help me, I can't stay out of this thread.
Imagine you pay a painter $10,000 to paint your entire house. A month after he's finished, you notice some of the paint peeling, and complain to the painter. The painter acknowledges that the paint he used was of inferior quality, and agrees to refund $2,500 of your payment.
You think that $2,500 is taxed as regular income?
Laughable.
jman220
10-02-2005, 05:37 PM
[ QUOTE ]
God help me, I can't stay out of this thread.
Imagine you pay a painter $10,000 to paint your entire house. A month after he's finished, you notice some of the paint peeling, and complain to the painter. The painter acknowledges that the paint he used was of inferior quality, and agrees to refund $2,500 of your payment.
You think that $2,500 is taxed as regular income?
Laughable.
[/ QUOTE ]
What part of my analogy did you not understand? Even if rakeback isn't taxable (and it is), then you still can't deduct the money you paid in rake from your profits per session, meaning that you include that rake you got back in your profits, meaning you pay tax on it anyway!!! The painter analogy is way off, you are not paying for a service here, like getting your house painted, you are paying a cost associated with a profit making business activity. At best, rake is a business expense as part of your profit making activity, and if you are getting part of that expense back, then you cannot deduct it from your income. Do you see why? This isn't something that is opinion based, I'm sorry, there is a correct answer, and the correct answer is that it is taxable. Read the tax code, or if you don't believe me, speak to a tax attorney. At its heart, the tax code is really simple: Everything is taxed. Its either taxed as a capital gain, or taxed as income, or something else. The only way it might not be taxed is if its a gift, and rakeback is not a gift, and don't even try to argue that it is, because it would be an incorrect argument. All the analogies I have seen thus far are regarding money that has ALREADY been taxed, and thus you do not have to pay taxes again. The $2500 you got back from the painter resulted in you gaining no net profit, that was $2500 that you had already paid taxes on when you made it. Getting rakeback is a realization event, it results in profit, it is taxable. It is money you are getting that you didn't have before, either its money you're making right there, or its you getting money back that you earlier paid as a business expense and which you have already deducted from the profits or added to the losses you made in any particular session. Whichever way you look at it, it is taxable.
Python49
10-02-2005, 05:59 PM
[ QUOTE ]
What part of my analogy did you not understand? Even if rakeback isn't taxable (and it is), then you still can't deduct the money you paid in rake from your profits per session, meaning that you include that rake you got back in your profits, meaning you pay tax on it anyway!!! The painter analogy is way off, you are not paying for a service here, like getting your house painted, you are paying a cost associated with a profit making business activity. At best, rake is a business expense as part of your profit making activity, and if you are getting part of that expense back, then you cannot deduct it from your income. Do you see why? This isn't something that is opinion based, I'm sorry, there is a correct answer, and the correct answer is that it is taxable. Read the tax code, or if you don't believe me, speak to a tax attorney. At its heart, the tax code is really simple: Everything is taxed. Its either taxed as a capital gain, or taxed as income, or something else. The only way it might not be taxed is if its a gift, and rakeback is not a gift, and don't even try to argue that it is, because it would be an incorrect argument. All the analogies I have seen thus far are regarding money that has ALREADY been taxed, and thus you do not have to pay taxes again. The $2500 you got back from the painter resulted in you gaining no net profit, that was $2500 that you had already paid taxes on when you made it. Getting rakeback is a realization event, it results in profit, it is taxable. It is money you are getting that you didn't have before, either its money you're making right there, or its you getting money back that you earlier paid as a business expense and which you have already deducted from the profits or added to the losses you made in any particular session. Whichever way you look at it, it is taxable.
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pwn3d.
teddyFBI
10-02-2005, 06:04 PM
[ QUOTE ]
...The $2500 you got back from the painter resulted in you gaining no net profit, that was $2500 that you had already paid taxes on when you made it...
[/ QUOTE ]
i'm open-minded and willing to listen to what you have to say. Just explain to me why it is that the above quote applies to monies you pay to a painter, but NOT monies you pay to a poker site. Either way, it's money that you've already paid taxes on, "when you made it", as you say.
jman220
10-02-2005, 06:11 PM
[ QUOTE ]
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...The $2500 you got back from the painter resulted in you gaining no net profit, that was $2500 that you had already paid taxes on when you made it...
[/ QUOTE ]
i'm open-minded and willing to listen to what you have to say. Just explain to me why it is that the above quote applies to monies you pay to a painter, but NOT monies you pay to a poker site. Either way, it's money that you've already paid taxes on, "when you made it", as you say.
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Thats exactly why you're wrong, you didn't pay taxes on the rakeback money. I'll restate my earlier example, and the example that chris stated. You play a session of poker, You Make $10,000, however $2,500 goes to rake, so you only have a profit of $7,500. So now you are only paying taxes ont he $7,500 profit, NOT the $2,500 rake. Now, you get $1,000 of that rake back. You never paid taxes on it, because you counted it as part of your losses when you were figuring your profit out in the first place. You must either, 1. Pay taxes on the rakeback as income you are recieveing right now, or 2. Not deduct the rake that you know you will get back from the profits you made in the first place. Either way, you are paying taxes on it. IF rake is just money that you are paying to poker sites for a service, then you don't get to deduct that from your income. If rake is a business expense and you get to deduct it from your income, then you can't deduct the part of it that you get back.
I don't think there are any more ways that I can say this, I appreciate that you are willing to listen, but if you are not paying tax on your rakeback, in either of hte two ways I have discussed, then you are breaking the law, which of course is fine to do, but at your own risk. Advising others on these boards though that rakeback is not taxable, which could cause them to break the law by relying on your advice, is no good. I am not yet a full fledged attorney, I do have about 6 more months of law school, and I don't like tooting my own horn, but I did take tax, I got an A, I have some idea what I am talking about, and this issue isn't even close.
MyTurn2Raise
10-02-2005, 06:14 PM
I'll actually use my accounting degrees for a change and say that unless the laws changed drastically in the 3-4 years since I was in school, YES, rakeback is taxable. If you play for a living, you know to report it. If you play a little for fun, it's likely no one will notice the difference of a few hundred dollars and you can plead ignorance and pay back taxes relatively easy if you get caught.
greg nice
10-02-2005, 08:40 PM
how many times does he have to explain it? it is very clear. it seems you want to be dense purposely just to save a few bucks.
jman220
10-02-2005, 08:46 PM
[ QUOTE ]
how many times does he have to explain it? it is very clear. it seems you want to be dense purposely just to save a few bucks.
[/ QUOTE ]
Unfortunately for him, and ESPECIALLY when dealing with Tax Law, ignorance of the law is not a defense, and the burden is on the taxpayer, not the government, to prove that they did no wrong. (At least for the government recovering damages and penalties).
wickss
10-02-2005, 09:19 PM
For the record, gifts are taxable. Unless, of course you are a nonprofit organization, which you are not. Unless your mission is to donate money at the tables to poor pathetic gamblers so that they will have more money to play with.
jman220
10-02-2005, 09:39 PM
[ QUOTE ]
For the record, gifts are taxable. Unless, of course you are a nonprofit organization, which you are not. Unless your mission is to donate money at the tables to poor pathetic gamblers so that they will have more money to play with.
[/ QUOTE ]
Well, gifts under a certain amount depending on from whom are not, but this doesn't qualify as a gift because there is no donative intent on the part of the the person giving the rakeback.
greg nice
10-02-2005, 09:55 PM
[ QUOTE ]
[ QUOTE ]
how many times does he have to explain it? it is very clear. it seems you want to be dense purposely just to save a few bucks.
[/ QUOTE ]
Unfortunately for him, and ESPECIALLY when dealing with Tax Law, ignorance of the law is not a defense
[/ QUOTE ]
YOU are the one being ignorant. he has explained it perfectly and you still choose to ignore what he has said.
jman220
10-02-2005, 10:06 PM
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
how many times does he have to explain it? it is very clear. it seems you want to be dense purposely just to save a few bucks.
[/ QUOTE ]
Unfortunately for him, and ESPECIALLY when dealing with Tax Law, ignorance of the law is not a defense
[/ QUOTE ]
YOU are the one being ignorant. he has explained it perfectly and you still choose to ignore what he has said.
[/ QUOTE ]
You obviously did not read my post, or are incapable of understanding it,I really can't explain it in any more ways. It is taxable, and I responded to his analogy and explained why it is incorrect. You don't have to believe me, I don't really care, call an accountant or a tax lawyer and they will tell you the same thing. Call the IRS and they will also tell you the same thing. Rakeback is taxable, its as simple as that.
teddyFBI
10-02-2005, 10:08 PM
Meh - i don't pay taxes to your government anyhow. God bless the Commonwealth.
jman220
10-02-2005, 10:11 PM
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Meh - i don't pay taxes to your government anyhow. God bless the Commonwealth.
[/ QUOTE ]
So let me get this straight, you took it upon yourself to give out bad legal advice on a subject which you not only have no information about, but for a country's legal system that you don't even live in?
teddyFBI
10-02-2005, 10:55 PM
[ QUOTE ]
[ QUOTE ]
Meh - i don't pay taxes to your government anyhow. God bless the Commonwealth.
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So let me get this straight, you took it upon yourself to give out bad legal advice on a subject which you not only have no information about, but for a country's legal system that you don't even live in?
[/ QUOTE ]
I do live in this country. Aliens don't pay taxes to the IRS on foreign-source income, but I'm sure you knew that already. I never gave legal advice, just an opinion. I am a 3L at a school far better than yours.
As you were.
jman220
10-02-2005, 11:18 PM
[ QUOTE ]
[ QUOTE ]
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Meh - i don't pay taxes to your government anyhow. God bless the Commonwealth.
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So let me get this straight, you took it upon yourself to give out bad legal advice on a subject which you not only have no information about, but for a country's legal system that you don't even live in?
[/ QUOTE ]
I do live in this country. Aliens don't pay taxes to the IRS on foreign-source income, but I'm sure you knew that already. I never gave legal advice, just an opinion. I am a 3L at a school far better than yours.
As you were.
[/ QUOTE ]
Wrong again. Online poker played within the United States doesn't qualify as foreign source income as it is money being made through an activity taking place substantially within the United States. (Unless you're only playing when you fly home on breaks). At this point, I'm done responding to you. I stand by my previous comments, if you don't believe me contact a tax lawyer, an accountant, or the IRS, I am quite confident they will agree with me.
Oh, and as for: [ QUOTE ]
I am a 3L at a school far better than yours.
[/ QUOTE ] I doubt that,I go to a pretty good school, but if you do, then thats pretty sad that you go to such a good law school but still can't answer such an elementary tax question as this correctly.
jman220
10-02-2005, 11:41 PM
[ QUOTE ]
[ QUOTE ]
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how many times does he have to explain it? it is very clear. it seems you want to be dense purposely just to save a few bucks.
[/ QUOTE ]
Unfortunately for him, and ESPECIALLY when dealing with Tax Law, ignorance of the law is not a defense
[/ QUOTE ]
YOU are the one being ignorant. he has explained it perfectly and you still choose to ignore what he has said.
[/ QUOTE ]
After rereading this series of posts, I'm thinking that you were probably meaning to respond to TeddyFBI with this comment and not me? Otherwise, it doesn't really make sense given your earlier post...
greg nice
10-03-2005, 12:16 AM
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
how many times does he have to explain it? it is very clear. it seems you want to be dense purposely just to save a few bucks.
[/ QUOTE ]
Unfortunately for him, and ESPECIALLY when dealing with Tax Law, ignorance of the law is not a defense
[/ QUOTE ]
YOU are the one being ignorant. he has explained it perfectly and you still choose to ignore what he has said.
[/ QUOTE ]
You obviously did not read my post, or are incapable of understanding it,I really can't explain it in any more ways. It is taxable, and I responded to his analogy and explained why it is incorrect. You don't have to believe me, I don't really care, call an accountant or a tax lawyer and they will tell you the same thing. Call the IRS and they will also tell you the same thing. Rakeback is taxable, its as simple as that.
[/ QUOTE ]
my apologies, i thought you were teddy. /images/graemlins/crazy.gif
theben
10-03-2005, 12:53 AM
iirc, coupons and rebates aren't taxed
RB shouldnt be but i bet it is.
just fudge things
Here is the last thread on the subject, where I and a tax professional consider the possibility that it is not taxable income but rather a rebate of service costs:
http://forumserver.twoplustwo.com/showflat.php?Cat=&Number=3297914&page=&view=&sb=5& o=&fpart=all&vc=1
There are so many people on this thread who know nothing about tax law providing forceful opinions on the matter. Its just silly.
Just because the rakeback could be excluded doesn't mean the original rake should be included as taxable income as a matter of law. I know, it would be "fair", its consistent, etc. But you should have learned in Kindergarten that the world is not always that black and white. Since many of you obviously didn't, let this one be a lesson. There are many instances in the application of tax law where inconsistent treatment reigns. This may be one of them; rake paid is clearly excludable from gambling winnings, rakeback is arguably a rebate of service costs.
"Arguably" has a certain meaning here. It doesn't mean you would win the argument. But if you can present a reasonable argument you can reasonably exclude the rakeback. If you get audited and lose the argument (or choose not to really fight it) you can pay up with interest but with no other penalties because you had a reasonable basis.
To the best of my knowledge (with some research on the matter) there have been no rulings, regulations, or cases where the rebate argument has been definitively addressed by the service or tax court.
Oh, and don't act on this as advice. It's an opinion. Consult your tax advisor on the matter before taking a position.
teddyFBI
10-03-2005, 11:51 AM
[ QUOTE ]
Here is the last thread on the subject, where I and a tax professional consider the possibility that it is not taxable income but rather a rebate of service costs:
http://forumserver.twoplustwo.com/showflat.php?Cat=&Number=3297914&page=&view=&sb=5& o=&fpart=all&vc=1
There are so many people on this thread who know nothing about tax law providing forceful opinions on the matter. Its just silly.
Just because the rakeback could be excluded doesn't mean the original rake should be included as taxable income as a matter of law. I know, it would be "fair", its consistent, etc. But you should have learned in Kindergarten that the world is not always that black and white. Since many of you obviously didn't, let this one be a lesson. There are many instances in the application of tax law where inconsistent treatment reigns. This may be one of them; rake paid is clearly excludable from gambling winnings, rakeback is arguably a rebate of service costs.
"Arguably" has a certain meaning here. It doesn't mean you would win the argument. But if you can present a reasonable argument you can reasonably exclude the rakeback. If you get audited and lose the argument (or choose not to really fight it) you can pay up with interest but with no other penalties because you had a reasonable basis.
To the best of my knowledge (with some research on the matter) there have been no rulings, regulations, or cases where the rebate argument has been definitively addressed by the service or tax court.
Oh, and don't act on this as advice. It's an opinion. Consult your tax advisor on the matter before taking a position.
[/ QUOTE ]
Don't question Jman's credentials. After all, he got an A in his 2L tax class. His mom also says he's the coolest guy she knows.
(thanks for the link)
StellarWind
10-04-2005, 03:23 AM
Rakeback and bonuses are equivalent to a B&M poker room giving you a comp (e.g. free meal, free show tickets, etc.) because you play there a lot. It is a very well settled point of law that comps are gambling winnings. That means that losing amateur players can deduct their gambling losses equal to the amount of their rakeback and bonuses on Schedule A.
If you are a winning player than you owe tax on your rakeback.
BTW, I am so tired of tax discussions that suggest rake is some sort of expense. Rake is taken out of the pot before anyone wins it. If you put $20 in a slot machine and $98 comes out you just won $78. If you put $20 in a pot and the dealer gives you $98 at showdown you just won $78. The other $2 that was raked is money that never belonged to you and which you didn't win. It has nothing to do with your taxes.
That's why the rebate argument is spurious. You never paid in the first place.
But couldn't rakeback just be considered as like a rebate?? It's not "earnings" at all, it's just a discount you receive. Like when you get your tax refund. I'm not worried since I live in a country where you don't have to pay tax on gambling income, just curious.
mephisto2000
10-04-2005, 04:22 PM
[ QUOTE ]
iirc, coupons and rebates aren't taxed
RB shouldnt be but i bet it is.
just fudge things
[/ QUOTE ]
Your post is not quite correct. Rebates are not taxed as income IF the product for which you received the rebate is for personal/business use.
But if you get rebates for merchandise that is being resold then you have to pay taxes on the rebate amount. If you read the tax code you'll find out that "rebate reduces your cost" and as such increases your profit and therefore is taxable.
Newt_Buggs
10-04-2005, 06:05 PM
[ QUOTE ]
BTW, I am so tired of tax discussions that suggest rake is some sort of expense. Rake is taken out of the pot before anyone wins it. If you put $20 in a slot machine and $98 comes out you just won $78. If you put $20 in a pot and the dealer gives you $98 at showdown you just won $78. The other $2 that was raked is money that never belonged to you and which you didn't win. It has nothing to do with your taxes.
That's why the rebate argument is spurious. You never paid in the first place.
[/ QUOTE ]
What about tournaments? When I play SNGs I have to pay $15 straight to the house along with the $200 entry fee.
Lads good points and a good discussion.
Here's a tip for you, move over to Ireland where all gambling income is Tax Free - yeah!!! /images/graemlins/laugh.gif /images/graemlins/laugh.gif /images/graemlins/laugh.gif /images/graemlins/laugh.gif /images/graemlins/laugh.gif
Don't know why I read it all, /images/graemlins/confused.gif just interested to see what the story was with rakeback over the pond.....
theben
10-05-2005, 12:20 AM
i really say no
StellarWind
10-05-2005, 02:10 AM
[ QUOTE ]
What about tournaments? When I play SNGs I have to pay $15 straight to the house along with the $200 entry fee.
[/ QUOTE ]
You just bet $215. It all went to the house and the house will pay you any money due at the end. Subtract $215 from whatever you win and that's your gambling winnings or losses.
[/ QUOTE ]
You just bet $215. It all went to the house and the house will pay you any money due at the end. Subtract $215 from whatever you win and that's your gambling winnings or losses.
[/ QUOTE ]
Not necessarily correct. Open your mind for a minute and consider this argument. You bet $200. You paid $15 to an online service provider for arranging this wager. You later get a rebate from this online service provider of $4. Why should the $4 be taxable?
And please, don't cite the comps case again, read the case first, if you do so you will quickly see that the facts and circumstances are very different and that rakeback does not necessarily = comps by precedent.
StellarWind
10-05-2005, 05:37 PM
[ QUOTE ]
Not necessarily correct. Open your mind for a minute and consider this argument. You bet $200. You paid $15 to an online service provider for arranging this wager. You later get a rebate from this online service provider of $4. Why should the $4 be taxable?
And please, don't cite the comps case again, read the case first, if you do so you will quickly see that the facts and circumstances are very different and that rakeback does not necessarily = comps by precedent.
[/ QUOTE ]
You realize this is the argument you should hope the IRS never makes?
My view: Pay $215 entry fee, win $1000, pay tax on $785 win, and pay tax on $4 rakeback. In total I pay taxes on $789.
Your view taken to its logical conclusion: Pay $200 entry fee, pay $15 service fee, win $1000, pay tax on $800 win, and pay no tax on rakeback. If I am a professional player I deduct the $11 net service fee as a business expense and pay taxes on $789. But if I am an amateur I cannot deduct the $11 net fee and must pay taxes on $800. Oops.
This is why the whole thread is dumb. You already subtracted the money from income when you computed how much you won in the tournament. Now you want to claim it's a nontaxable rebate when you get the money back. That means you are trying to deduct an expense you didn't actually pay in the end. The IRS is never going to allow that in a million years.
Fortunately your analogy is flawed. I do not have separate bets with everyone who entered the tournament. My only contract is with the poker room. I bet $215 on the outcome of this tournament and the room is legally obligated to pay me if I win. Even if everyone else in the tournament used fake credit cards and fled to Rio without ever making good.
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