Re: Is rakeback taxable?
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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.
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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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