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I don't have a reply on the tax issue, but I thought I'd give my opinion anyway. If I were in your shoes, I wouldn't take your dad's money. It certainly is tempting to instantly build a bankroll and play higher stakes, but not on the backs of your relatives. Do not put him in the position of losing money and/or getting snarled up in tax problems. Yes, he can give a $10k tax-free gift to you every year, but do you really want to be in the position of gambling with and possibly loosing your father's money?

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Good point. To clarify, he knows that this is a risky investment and he knows that it is certainly possible that I'm going to lose the money.

I should also clarify that I've been backed before and played up to 30/60, but mostly 10/20 and 15/30. I also have a significant number of hands at these levels and I am pretty confident I am a winning player there. I stopped my original backing deal because I was getting shafted with how much I was getting back, and the backer was extremely results oriented session by session. My father, as a backer, has already said he wouldn't want more than an update every two months. He understands the variance involved.

I would also be following a 300 BB or drop down rule, and as I have won close to 2bb/100 over 500,000 hands, mostly 8 tabling. For this deal I wouldn't more than 3-4 table. So I'm going to say it would be very very very difficult for me to lose most of it, and I'm going to say impossible for me to lose it all. Especially with rakeback/bonuses added.