#1
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Setting up a Corporation for your gambling business
I was at a thanksgiving dinner. Someone suggestion to set up a corporation for playing poker. Does anyone do this? Know the benefits/downsides to this?
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#2
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Re: Setting up a Corporation for your gambling business
Unless you know how to get a bank loan for your gambling enterprise then plan on defaulting what makes you think this would be useful.
Jimbo |
#3
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Re: Setting up a Corporation for your gambling business
Downsides:
-Incorporation fees ~ few hundred / year depending on the state -Self Employment Tax (HUGE) adds about 15% ON TOP OF your income tax. -More likely to get audited. You have to be making more playing poker than any other job you have. Upsides: -Keep your standard deduction if you were using that (+~$1000). -Deduct "Business Expenses". I think you should incorporate if you make more than $80k / Year on poker, and you have like $30k / year in business expenses (travel, computers, accountant, NOT ENTRY FEES). |
#4
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Re: Setting up a Corporation for your gambling business
[ QUOTE ]
I think you should incorporate if you make more than $80k / Year on poker, and you have like $30k / year in business expenses (travel, computers, accountant, NOT ENTRY FEES). [/ QUOTE ] Sorry but that is awful advice. The only reason to ever incorporate as an individual is to insulate yourself from personal liability |
#5
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Re: Setting up a Corporation for your gambling business
Sorry, but you're wrong. You can't deduct all of those computer screens and other things you buy for poker unless you file as a professional gambler, incorporated and use a schedule C.
Other reasons you might want to incorporate is if you have funny backing deals where you want to sell shares of yourself. There are lots of reasons to incorporate, and liability is not the primary motive to incorporate for most gamblers. [ QUOTE ] [ QUOTE ] I think you should incorporate if you make more than $80k / Year on poker, and you have like $30k / year in business expenses (travel, computers, accountant, NOT ENTRY FEES). [/ QUOTE ] Sorry but that is awful advice. The only reason to ever incorporate as an individual is to insulate yourself from personal liability [/ QUOTE ] |
#6
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Re: Setting up a Corporation for your gambling business
[ QUOTE ]
Sorry, but you're wrong. You can't deduct all of those computer screens and other things you buy for poker unless you file as a professional gambler, incorporated and use a schedule C. [/ QUOTE ] I'll be nice to you since it is a holiday. Filing Schedule C has nothing to do with being incorporated. It only means you are operating a (for profit) business. Please look it up before posting in this thread again. Edited: I made it easier for you look at this IRS Schedule C Introduction Jimbo |
#7
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Re: Setting up a Corporation for your gambling business
By incorporating, you gain the advantages that any small business man gains when incorporating. Your insurance becomes a company benefit and a business expense. Your car could be a company car, and deductible. Talk to a CPA about the advantages.
The disadvantage would be you would have to pay yourself a small salary, which would be double taxed, once at the corporate level, and once as personal income. You would also have to pay your matching social security on that salary. The advantage is, with profits over your salary, the corporation could pay you that as a dividend which is taxed at a lower rate. Talk to a CPA, see what deductions you can generate as a corporation, and where your break-even point on income is as far as being a corporation or an individual. |
#8
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Re: Setting up a Corporation for your gambling business
caedcounter0,
Every advantage you listed except the dividend benefit is available to anyone who files as a sole proprietor using Schedule C. |
#9
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Re: Setting up a Corporation for your gambling business
Right, you can file under a schedule C as a sole proprietor, and not be protected from liability as if you incorporated.
But actually incorporating is not a big issue. The real issue, which i assumed the original question really was, is if you should file as a professional gambler. That is where I think most people shouldn't because of the huge Self Employment tax penalty. The amazing thing is that if you file as a professional gambler and accept the huge Self Employment penalty, the IRS is more likely to audit you because people typically do this to write off their trips to vegas. If you want to try to start writing off company cars, dinners, shows, first class flights to vegas, Monte Carlo, etc., they will bust your balls about this if you get audited. |
#10
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Re: Setting up a Corporation for your gambling business
getting a 15% dividend tax rate on a large bulk of your income, basically turning it into passive income, could be important.
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