WSOP: Bubbling better than a weak cash?

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If I bubbled, and was given a free entry to next year's event, I would put that down as a 10K loss, as I'm out of pocket 10K, and the item of value I was given has no value until the event takes place next year. If the entry is non-transferable, then I have no possession of it until they sign me up next year, so I think it is perfectly proper to treat it as valueless this year. Of course, next year, should I cash in the event, my entry fee would have to be considered $0. Thus, a 12.5K win would require me to pay taxes on 12.5K, not on just 2.5K.

Later, Greg Raymer (FossilMan)

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Have you verified this with a tax professional? I am studying tax in school and checked my notes and I cannot find a clear yes or no answer in regards to this being acceptable to the IRS. Based on what I have learned the 10k entry to next years event would be taxable in the year it was received for the average cash basis taxpayer. However, you have an interesting defense by claiming the entry fee has no value until the tournament starts, so I am not sure what the correct answer is.