[pokerstudAA]

Among the most important court decisions were those regarding whether a full-time professional gambler's wagering activity constituted a trade or business for income tax purposes. (Groetzinger v. Comr. 1985) "there is an equitable basis for according a high-volume short-term trader different tax treatment than the taxpayer who occasionally engages in a short-term trade."

In (Comr. v Groetzinger 1987), the Supreme Court concluded "to be engaged in a trade or business, the taxpayer must be involved in the activity with continuity and regularity and that the taxpayer's primary purpose in engaging in the activity must be for income or profit." This landmark decision confirmed the availability of professional gambler status for income tax purposes. (IRS Code §162(a) and §62(a)(1)).

If you want to claim poker as a business you must be considered a "professional gambler." Otherwise, your winnings are included as ordinary income and your losses are itemized deductions up to the extent of winnings and subject to income limitations. If you manage to convince them that poker is your business those items such as books, internet, vegas vacations, and the like become business expenses deductible on your Schedule C.

You can bet that if the IRS doesnt get their cut of your gambling winnings because you claim gambling is your business they will desire a closer look.