How to make the WSOP winnings tax-free

[Abagadro]

The other thread brought this to mind:

Everyone can gift to anyone up to $10k a year tax free. You can give 10k to an unlimited amount of people and an unlimited amount of people can give 10k to you. You just can't give more than 10k to any one person without paying the gift tax.

So, the buy-in is never legally transferred to the house, it is just pooled. Then, when the payouts happen, the appropriate number of persons not in the money "gifts" each of their buy-ins to the appropriate person in the money (after that person takes back out his or her buy-in). Everyone files a Form 709 taking the yearly exemption. Ta da! Tax free payouts.


(Okay, this is far-fetched, but THE MAN is getting too much of a rake). [img]/images/graemlins/wink.gif[/img]


EDIT: BTW, this should not be taken as tax advise or instructions as to how to cheat the IRS which is never a good idea. It's just a goofy thing I thought of driving in traffic this morning. Hi mister revenue agent!

[Sponger15SB]

http://www.eliteactivity.tv/home.php


yeah gift giving!

just kidding

[fnurt]

I know this post was intended in a lighthearted vein, but for anyone who's curious, the reason it doesn't work is that the money is not a gift if you are contractually obligated to give it after the tournament is over. If the house is holding the money and you have no way to get it back without winning, then guess what, you did "legally transfer" it.

Say I buy a car from you and you say hey, instead of paying me $10000 for that car, how about if you pay me $1 and then just happen to give me a gift of $9999, so I won't have to pay as much in taxes. Clever, but no good.

[Caveman]

Another problem with this idea is that there is a lifetime limit amount on how much money you can give as gifts in the US tax code. Once you pass this amount taxes are supposed to be paid on any money given.