Tax Q -- Taking A Shot To Offset Wins
 

I apologize for my ignorance on these tax matters ...

But does it make sense to take a shot at a medium to big buy-in tournament to offset poker winnings for tax purposes?

Say you've earned as a second income $50k playing poker online for a year and want to declare your winnings. If you play in 4 $2.5K buy-in events, that's $10k that goes untaxed, saving yourself 30-40% of that and giving yourself an offset of $10k.

True, you've lost $10k to save yourself $3-4k, but you've also given yourself a shot (4x) at >$100k.

I've heard of wealthy people going into some investment to use the losses as a tax write-off or as an offset on their earnings -- is it the same principle?

Didn't know where else to post this. Thanks.

Re: Tax Q -- Taking A Shot To Offset Wins
 

For the record I know very little about the whole tax issue. One that I do know is that you don't just declare your profit, you declare your all of your winnings and deduct all of your losses. So in the end I beleive it will have basically the same effect.

Now on to the point of your post. If all the above is true, it is still a question of EV. Just look at it from this point of view: Would you enter the tournaments if it only cost you 6.5k instead of 10k or is that still a losing proposition for you.

Just because something is half off doesn't mean you should buy it.

Re: Tax Q -- Taking A Shot To Offset Wins
 

Your logic is flawed because your tournament winnings will add to your income for the year, and will be taxed.

Re: Tax Q -- Taking A Shot To Offset Wins
 

As long as he takes into account that he's only winning around 70% of what they give to him I blieve his logic is correct.

However, the only difference between doing it this year or next is if you don't intend to win money next year. This is because you wouldn't have the winnings to deduct your losses from which you already have accumulated this year.

Re: Tax Q -- Taking A Shot To Offset Wins
 

Terrible idea. Do not put money in things solely as a tax write off. Do it because it will win money.

On a side note... Could you keepmoney in your roll as a form of assets ofr your home business and not tax winnings or losses on it till you take it out?

Say you start with 2k... Grow your roll to 20k and withdraw 40k over a year... Pay taxes on 40k?

Or the next year you run bad and withdraw 30k but your roll shrinks to 15k. Taxable income at 15k?

Re: Tax Q -- Taking A Shot To Offset Wins
 

Let's not get over-complicated about this. Entering in 4 2.5k tournaments and not cashing will offset the 10k income for the year. Yep, no tax issue.

Re: Tax Q -- Taking A Shot To Offset Wins
 

Poker winnings are taxable as soon as your current session ends.

Re: Tax Q -- Taking A Shot To Offset Wins
 

[ QUOTE ]
But does it make sense to take a shot at a medium to big buy-in tournament to offset poker winnings for tax purposes?

[/ QUOTE ]

No it doesn't. Thinking of poker losses as some kind of "tax shelter" is really nonsensical.

If you do lose money playing tournaments, then of course that is a loss that offsets other wins for tax purposes, but you will receive no benefit since it's better to pay taxes on $10,000 than to lose $10,000 unless you are in the 100% tax bracket in which case it is a wash.

If you are worried about your tax liability, pay a qualified accountant, lawyer, and/or financial advisor to explain your options (this advice will often be much better than message board advice).

Donate to a charity or something.

If you have some money burning a hole in your pocket and want to take a shot at some high buy in tournaments, go for it. But play to win, not to throw away your profits so that someone else can pay taxes on them (the government really doesn't care if you pay the taxes on that $$ or someone else does).

Re: Tax Q -- Taking A Shot To Offset Wins
 

Obviously it depends more on if the acutal poker you are considering is +EV and appropriate for you roll, but the spirit of what you're trying to do is reasonable.

Now is a good time to take a shot (not a wild one, but an appropriate). If you lose, you owe less in '05 taxes, if you win, your roll is noticeably bigger.

Re: Tax Q -- Taking A Shot To Offset Wins
 

I do this all the time. That's the beauty of our tax system.