If you win a seat in a tounry is it taxed?

[octop]

Im playing some satellites to try and get a seat in the Borgata WPT event. Now hypothetically if I win a seat and then get bumped out of the money is it taxed?
Logically I would say no. (Or I shoulod have to report winning a 10k seat and then dedeuct the 10 k if I get bumped out of the money)
For example suppose I made 60k in the year frokm gambling and won a seat worth 10 k. If i take the seat and sell it for 10 k i should report the 10 k bringing my income up to 70. Then the day of the event I decide i do want to play and buy in for 10 k of my money and get knocked out on the first hand. This would bring my income down to 60 k again.
Am I missing something here?

[broiler]

The tax treatment of a satellite is a sticky situation. If you file as a professional, it doesn't really matter since you end up reporting a net figure anyway. I would choose to not report it until the seat is used, if I planned on using the seat.

The nonprofessional has a slight problem. A seat that can be sold has a value and the IRS does not like that in terms of not claiming income for the win. Most B&M satellites give seats that are nontransferrable for that reason. If you can't sell the seat, then your gambling loss is the cost of the satellite when you miss the money in the big event.

Selling the seat clearly generates taxable income under either filing scenario. I wouldn't sell the seat, unless I was sure that I wasn't going to play in the tournament, especially since you would likely sell for a discount and then rebuying for full price.

[Uglyowl]

Whether the seat is can be sold is not concrete, sometimes they are not.

If it was me I would not report it.

Seems very technical and not something you would get in trouble for getting wrong, it would only be fixed if stumbled upon.

I would only report the cash winnings from the end product.

[MicroBob]

i think that will be pretty much my philosophy.

I won a $12k package on the PPM cruise this year. The tourney itself was a $10.2k value.

I made the money in the tourney...but only barely...so I won $5200.


Would be REALLY strange to pay taxes on the $10k tourney-entry AND the $5.2k prize-money.

I basically think it's a $10k buy-in that you 'won'.
And then when you play the tourney you 'spent' the $10k.

I pretty much won $5.2k so that is what I am reporting which I think is reasonable.

If I'm a million miles off about this I'm sure someone will tell me.
My Dad who is pretty much my tax-adviser too will steer me in the right direction if that is necessary (we haven't discussed this year's taxes yet or how we should handle my tourney entries).

[broiler]

I believe that you are doing this correctly. My memory is that the Party cruise isn't easily sold, therefore you won
$5,200.

The only change that the IRS might make is that they might want to determine a value for the trip. I think that you would have a decent case to say that you couldn't separate the trip from the tournament. I would argue that it would be impossible to separate the two. IIRC, you file as a professional and the income from the trip would also be offset by an expense for travel in the same amount.

[Niediam]

There is no tax on the tournament fee you won but of course you must declare anything you won in the actual tournament. In addition, there is tax liability for anything you won in the satillite besides the tourny fee (plane tickets, hotel, spending money, etc).

[MicroBob]

but if they just give me $2k in cash for 'travel expenses' as part of the prize-package then I claim that as 'income earned' and THEN turn right and around deduct whatever I spend on flight/hotel.

just hang on to those receipts.

[AcmeSalesRep]

[ QUOTE ]
but if they just give me $2k in cash for 'travel expenses' as part of the prize-package then I claim that as 'income earned' and THEN turn right and around deduct whatever I spend on flight/hotel.

just hang on to those receipts.

[/ QUOTE ]

This seems true when filing as a professional...but it would not be true otherwise, would it?

Acme

[theben]

shouldnt be. when you win the seat, thats profit. when you play and lose, thats a loss. if you sold the seat then u should be taxed

[Niediam]

You are correct.