Q about tournament pay when you have backers

[david050173]

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You should take the approximate tax out of the winnings, then give the backer his share of the remainder. If your backer had 10% of you winnings. And you had a $5000 profit on a given tournament. Say 40% goes to taxes, leaving you with a $3000 profit. Your backer should receive $300.

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I don't think this is right at all. Under this scheme, the backer has to pay taxes twice ( the cut off the inital win and then he will pay taxes on the his share of what is left). I am pretty sure that this is similiar to lottery winnings that are split among multiple people where you fill out a form and each party member is responsible for thier own share of the taxes. If you are in this situation, you really need to talk to a tax lawyer to make sure you do everything by the book.