Very Basic Poker Accounting Issue

[La Brujita]

Sorry if this is silly but I have a question. I keep daily records of wins and losses but am not sure what to do with this issue.

I won a 33+3 Satellite into the Super for the January 11th UB tourney (after some heartbreaking losses).

I was going to record this as a 36 dollar loss in my books. Then I thought I wait till I get knocked out of the super and record the loss. But then I decided I earned $100 cash equivalant in this satellite irrespective of any future wins or losses and that I should but this as a 0 in my wins or losses column.

I think this is correct but it seems odd if I were to win $1,000,000 that I would record it as a win of $1,000,000 and not 999,999,964.

I know this is anal but I was just curious what people think the accepted standard is.

Regards

[Vehn]

Hmm I wouldn't count any tourney entries as losses at all, just have a tourney entry column and tourney results column.

[Bubmack]

From an accountant's perspective......you should record losses when they are incurred. This loss has not yet been incurred. However, you did actually win something. Therefore, as long as you beleive this asset has value, expect it to be relizable (i.e. - have no further obligations)...then you should record it as income. So If I wanted to make journal entries and I will assume you bust out of the super without making the money I would make the following entries:

2003

Dr Super Entry $100
cr Tourney Win $100

2004

Dr Tourney Loss $100
Cr. Super Entry $100


Whew, Im glad I gave up on this business!!!!

Bubs

[webiggy]

It all depends on whether you are looking at it from a tax perspective or an accrual based accounting perspectice.

Individuals are on a cash basis for tax purposes, so the $33 would be an expense which you can use to offset any gambling losses earned this year.

For business perfomance measurement, you'll want to use the accrual method of accounting in which you would only recognize the expense after you played the Super.

Having said that, one might argue that for both methods, you should recognize as earnings the amount of the entry you would have had to pay had you not won the satellite. So if the buy in for the Super is $250+25, then your net winnings for winning the Satellite would be $244 (275 less 33). The remaining $244 would then be the net entry fee for the super which be netted against your winnings for that tournament.

I hope that helps. Good luck next month.

Iggy

[pretender2k]

I always record cash in and cash out on the day they happen.
$36 out today
$1,000,000 in whenever
but heck at that time I will probably hire an accountant to figure it out LOL

[ramjam]

</font><blockquote><font class="small">En réponse à:</font><hr />
Individuals are on a cash basis for tax purposes, so the $33 would be an expense which you can use to offset any gambling losses earned this year.

[/ QUOTE ]

If this logic is correct, I presume that any US player who plans on entering a large buy-in tourney in the New Year and who is able to prepay the buy-in now could do so and claim a deduction this tax year?

</font><blockquote><font class="small">En réponse à:</font><hr />
Having said that, one might argue that for both methods, you should recognize as earnings the amount of the entry you would have had to pay had you not won the satellite.

[/ QUOTE ]

This seems the most sensible answer in terms of tracking one's own performance. From a financial accounting perspective, I do not think that recognition of any revenue in 2003 would be permissible under US generally accepted accounting principles since the Super entry is non-transferable - the entry fee could not be considered "realized or realizable" and the "earnings process" could not be considered completed until one had won through to a prize in the final event (see SEC Staff Accounting Bulletin 101 and FASB Concepts Statement 6). The answer might be different for, say, a Stars event if the seat that had been won was transferable and there was sufficient liquidity in the secondary market to establish a fair value.

[La Brujita]

Thank you all very much for your comments. I think my problem was I track my wins and losses for both performance and tax reasons, and those reasons seem to be at odds with each other.

[webiggy]

[ QUOTE ]

This seems the most sensible answer in terms of tracking one's own performance. From a financial accounting perspective, I do not think that recognition of any revenue in 2003 would be permissible under US generally accepted accounting principles since the Super entry is non-transferable - the entry fee could not be considered "realized or realizable" and the "earnings process" could not be considered completed until one had won through to a prize in the final event (see SEC Staff Accounting Bulletin 101 and FASB Concepts Statement 6). The answer might be different for, say, a Stars event if the seat that had been won was transferable and there was sufficient liquidity in the secondary market to establish a fair value.

[/ QUOTE ]

So are you saying that there is no value conveyed for winning the satellite? We're not talking about an SEC entity, we're talking about real consideration received for winning a tournament, which is avoidance of paying 5 times the cost of a direct buy in. I think this meets the test of the income being "realizable" and "measurable".

In regards to the other issue about buying into a tourney, that tourney entry would probably have to be irrevokable and nonrefundable in order for the deduction to qualify. The cash would likely have to be out of control of the tax payer.

[alekhine8]

I cant believe I see crap like SAB 101 and other accounting stuff on here. Come on, people! I come here to get away from work. My fault for reading an accounting thread, I guess.

[MaqEvil]

I dont know what the standard is, but I record everything by my balance at the sites. When I win a satelite, I just add whatever the value of my tourney entry fee to my account balance until I play in the tourney.