[broiler]

Disclaimer: I am a CPA and have had 3 clients audited for online gambling in the last 5 years, two for sports betting and one for poker and sports betting.

The IRS did consider bonuses and rake rebate as a part of income in all 3 situations. Their reasoning is that play is required to qualify for a bonus or rake rebate. The play is a taxable event, therefore any payment received as a result of this play is taxable. The IRS equated bonuses and rakeback to comps, which are taxable and have been upheld as taxable in multiple tax court cases.

A purchase point discount would be a different scenario, but if the underlying event is taxable, then the discount has an effect on taxes. Lets say you buy your poker laptop for $1,000, but receive a $100 rebate. Your depreciable basis for the computer is $900 because the rebate reduced your cost to place the asset in service. If the computer was personal use only, then the $100 rebate has no impact on your taxes whatsoever as the underlying purchase was not taxable.

My thought is that the tax attorney didn't have all of the information in order to make a correct analysis of the situation. I know that people come on here every month and try to argue that rakeback and bonuses are not taxable, but they never have any proof or reason that stands up in their defense. I would be interested in seeing what the tax attorney used as his basis for the decision that rakeback is not taxable. Not trying to be a jerk here, but I need hard evidence to change my opinion, especially since I have dealt with the IRS in 3 circumstances on this matter. The poker player's return included rakeback as income and we would love to amend his return to reduce that income since it was more than 15% of his income for the year.