Online Balances-- Asset?
 

When I prepare my taxes, what do you guys think? Should online balances be considered a wager or an asset? If it should be an asset, what if I put my whole bankroll on the table New Year's Eve so it actually is chips in play and not money in account? Taxes will be fun.

Re: Online Balances-- Asset?
 

I don't understand being taxed on assets?????

Capital gains and income tax only
 

You don't pay tax on capital, only on capital gains, that is increase in asset value when you sold and didn't buy back within like 28days? Varies with every country.

You get tax on income, you don't get tax relief from gambling losses unless you can prove that the lost occurred due to operating a gambling business which is possibly illegal in your place without a licence.

So you need to pay tax on your winnings if you declare them. They don't care if you lost it or not.

Unless you are non-US citizen and non-resident, I think US- guys are taxable worldwide I am not sure since I am not US guy but I have US companies.

It is easy not to pay any tax legally in your situation but quite complicated to implement the scheme so I'll leave it out.

I only typed this out cause not much to do while waiting for friend to transfer me $200 to HUGEFISH2888@epassporte.com for hookers in Thailand. Only got Epassporte visa with me which is running out of hooker cash and Partypoker barred cashier access from Thailand!!!

Re: Online Balances-- Asset?
 

[ QUOTE ]
I don't understand being taxed on assets?????

[/ QUOTE ]

In the US, some states (such a Michigan) have a tax on all assets as well as income. Some states (such as New Jersey) have a tax on income. Some states (such as Nevada) don't have a tax.

Re: Online Balances-- Asset?
 

OK, BUT then is money in your account even capital, or is it simply a wager in action? I.E. when i take money from my checking account and buy chips with them do I have an asset, or can I take a deduction as a gambling loss until I cash them back in, when it would be a gambling win?

Re: Online Balances-- Asset?
 

This isn't an expert legal opinion, but I strongly suspect you'd be expected to treat the money on account as an asset. I don't think one could reasonably describe money sitting in an account (or converted into chips redeemable for money) as having been wagered. Assuming the casino/poker room is reputable, the account or chip value is more or less equivalent to having a pile of cash with a clearly quantifiable value.

Re: Capital gains and income tax only
 

[ QUOTE ]
You get tax on income, you don't get tax relief from gambling losses unless you can prove that the lost occurred due to operating a gambling business which is possibly illegal in your place without a licence.

So you need to pay tax on your winnings if you declare them. They don't care if you lost it or not.

[/ QUOTE ]

My accountant assures me this absolutely untrue, so long as you claim that you are a professional. He says it is indisputable that you may claim losses up to the amount of your winnings.

I am hoping he is right.

Based upon what Jelly posted, one could have earnings of $200K for the year, losses of $100K, and need to pay tax on $200K. This cannot be right, particularly if one's primary source of income is poker.

Re: Online Balances-- Asset?
 

[ QUOTE ]
OK, BUT then is money in your account even capital, or is it simply a wager in action? I.E. when i take money from my checking account and buy chips with them do I have an asset, or can I take a deduction as a gambling loss until I cash them back in, when it would be a gambling win?

[/ QUOTE ]

My accountant says that if you are audited, the only balances that will be in play will be you bank account balances, which will of course require accurate reconciliation.

Your poker site balances will not be subject to examination, just as your Neteller account will not.

At least that's the way we're declaring.

Think of it as realized gain as opposed to paper gains. Your money becomes profit when it hits your checking account, loss the moment it leaves. Where it is parked in the interim isn't that important.

Now, granted, much of this is grey area. I'm just telling you what he is telling me, and what I am hoping he is right about.

Re: Online Balances-- Asset?
 

This is more of a darker shade of grey than most grey areas. When you are audited, it is usually the presumption on the part of the IRS agent that the taxpayer is guilty and is in some way trying to defraud the government. Before the audit commences he goes through a series of questions designed to disclose hidden assets and/or hidden sources of income. Of course if you lie, you are subject to a Martha Stewart type persecution. Some of those questions are: do you have any cash at home? How much? In the safe deposit box? What bank Accounts? (includes Netteller) Any foreign bank accounts? (Netteller?) There is even a place on the return that asks that question.

The safest thing in an audit is let your accountant deal with the IRS and stay away from the audit so you are not asked embarassing questions and your accountant can say "I don't know?"

As to whether the cash in your account is an asset or wager in action is like asking whether the cash you took out of the bank account to buy business supplies and is presently in your wallet is and asset or an expense.

Just my 2 cents.

Re: Online Balances-- Asset?
 

IMO, If you "lose" all your online BR on Dec. 31st 2004 at 23:59 and sit out/log out and "win" it again on Jan. 01 2005 at 00:01 suddenly your taxes have been deferred.

My IRS friend agrees, but I really don't care because I'm not a US resident for tax purposes.

I will let others ellaborate. [img]/images/graemlins/smirk.gif[/img]