Online Balances-- Asset?

[Baulucky]

[ QUOTE ]
I only typed this out cause not much to do while waiting for friend to transfer me $200 to HUGEFISH2888@epassporte.com for hookers in Thailand. Only got Epassporte visa with me which is running out of hooker cash and Partypoker barred cashier access from Thailand!!!

[/ QUOTE ]

Who could have guessed that the great Nelly Angel Weelnam, high stakes BJ tracker, sports-arb especialist, high stakes world-class-poker-player and bullshitter extraordinaire would end up begging to pay for sex in a public interner forum?.

Live long enough and you'll eventually get to see everything...

[Rusty266]

According to the federal tax laws, amounts over $10,000 in say an online poker acount, must be reported to the IRS.

How such a thing is enforced or what the tax implications are, I can't say. But keeping your account under $10k eliminates the need for reporting it to the IRS.

[Rockatansky]

[ QUOTE ]
[ QUOTE ]
You get tax on income, you don't get tax relief from gambling losses unless you can prove that the lost occurred due to operating a gambling business which is possibly illegal in your place without a licence.

So you need to pay tax on your winnings if you declare them. They don't care if you lost it or not.

[/ QUOTE ]

My accountant assures me this absolutely untrue, so long as you claim that you are a professional. He says it is indisputable that you may claim losses up to the amount of your winnings.

I am hoping he is right.

Based upon what Jelly posted, one could have earnings of $200K for the year, losses of $100K, and need to pay tax on $200K. This cannot be right, particularly if one's primary source of income is poker.

[/ QUOTE ]

This is correct, except for the part about having to be a professional in order to deduct losses. Section 165(d) of the revenue code allows you to deduct gambling losses to the extent that you have gambling gains. There is no requirement that you be a professional gambler in order to do this.

There may be other benefits to having poker playing considered your "trade or business". However, anyone to whom this applies should talk to a knowledgable accountant or tax attorney to determine their best course of action.

[37offsuit]

Say you're Greg Raymer and instead of paying 1/3 of your $5 mil in taxes, you decide to go to the casino and put $2.5mil on red and $2.5mil on black on a single 0 Roulette wheel that will spin through midnight on December 31st?

Since you will only lose 1 in 37 times, this has to be +EV.

[Bytestream]

"For most taxpayers, the chances of being audited are low.

But for those who use offshore credit cards, tax shelters or trusts to hide income, or for wealthy taxpayers who understate income, the odds may be considerably greater.

Last year the Internal Revenue Service shifted its audit priorities to focus on promoters of abusive tax shelters, schemes and trusts, as well as participants in such tax-evasion schemes.

IRS estimates the nation's "tax gap," the difference between income taxes that should be paid and what is actually collected, to be about $207 billion a year. Not all lost revenue is due to cheating, but evaders do make up a significant portion.

Traditional audit "flags" include large itemized deductions -- especially for charitable contributions -- and meals, travel and entertainment expenses for taxpayers who are self-employed. IRS is also targeting promoters of nonexistent slavery reparations, those who make frivolous arguments to avoid filing returns, and employment schemes such as paying in cash and filing false payroll tax returns.

People who have credit cards from non-U.S. banks or financial institutions also may find themselves audited. While it's not illegal to have such cards, they can provide easy access to offshore funds and accounts in tax-haven countries that allow income to be hidden. (U.S. citizens must pay tax on their worldwide income.)

In recent years, the odds of being audited have been very low -- 1 in 202.

Three-fourths of audits -- "examinations" in IRS parlance -- are done by mail. The agency sends a letter to a taxpayer inquiring about a return, a possible error or documentation for certain deductions or items. Often, the taxpayer simply sends in the requested documentation or explanation and, if tax is owed, sends IRS a check. "

------------------------------------------------------------
I am not a lawyer or account, this is just my guess, but I think if you actaully claim "some" poker winnings and your deductions don't set off any flags, it probably wont even be a concern for you.

Furthermore I would guess that if you did get audited, and your poker income came into question, I doubt that with the fact that you made an effort to claim your winnings in conjuction with all the grey zone rhetoric, that your penalty would be severe. Most likely you will just have to pay the rest of your taxes and a little interest.

Someone please correct me if I am wrong, but I would assume that if you didn't have any significant deductions to worry about, no high interest bank accounts etc, and you didn't own a house and simply filed a 1040-EZ with your W2 wages, you have almost a 0% chance of being audited.

[Bytestream]

untill you have to claim those winnings next year..and the year after.... untill of course the ball lands on green and then you don't have to worry about those stinkin taxes anymore.

[Rushmore]

[ QUOTE ]
This is correct, except for the part about having to be a professional in order to deduct losses. Section 165(d) of the revenue code allows you to deduct gambling losses to the extent that you have gambling gains. There is no requirement that you be a professional gambler in order to do this.

There may be other benefits to having poker playing considered your "trade or business". However, anyone to whom this applies should talk to a knowledgable accountant or tax attorney to determine their best course of action.

[/ QUOTE ]

Looked into it a bit further. You are right, i'm happy to say. It's expenses that you may not claim unless you are professional.

My accountant tells me that one of the big drawbacks to declaring as a pro is social security, which will need to be paid. Ultimately, the question is whether or not you can offset your social security contributions with expenses. This would depend on a lot of things, obviously.

Talking to a knowledgeable tax attorney or accountant is clearly the correct thing to do, but be advised--you may hear different things from different people on this subject. It's a little tough to get a straight answer on some things (what constitutes a "session," what do you need for online documentation [Neteller account, all poker site accounts, checking accounts, and/or personal books?], are funds in poker accounts declarable gains, or do they only become so when you cash out?, etc.)

It's esoteric, even for the guys who are expected to know. There is some grey area.

Make a good faith effort, and hope not to be audited.

[Rushmore]

Now my accountant is saying that if you have access to the funds without penalty for withdrawal, the funds must be declared.

On the bright side, I have never heard of a poker site or of Neteller reporting to the IRS. I do not know if they have been asked to do so, but I am being assured they would not in any case.

Glass half empty, glass half full.

By the way, I do not see this as suggesting that it is OK to evade taxes. If you were NOT to declare money at the sites, you would eventually have to anyway (upon cashout), OR you would lose it and it would be a moot point. Yes, an infraction, but no, nothing egregious, and certainly nothing you're going to end up eating with plastic utensils over.

[Wahoo91]

Now my accountant is saying that if you have access to the funds without penalty for withdrawal, the funds must be declared.

IMO this is correct.

Also, when you show all your bank accounts, where do you tell the IRS those deposits to Neteller went without lying or showing the IRS your Neteller statements.

[Rockatansky]

[ QUOTE ]
are funds in poker accounts declarable gains

[/ QUOTE ]

There's no question that gains from playing poker are supposed to be reported to the IRS, regardless of where the gains are presently located. As to whether the IRS will know about your gains if they're in an online poker account or in Netteller, I honestly don't know.

I know this isn't what most people want to hear. The fact is, though, that the revenue code defines income as "gains from whatever source derived," and the Supreme Court has interpreted this phrase as granting Congress the power to levy taxes to the extent that is Constitutionally permissible. This generally means that the IRS doesn't care about cute distinctions about where funds are located and won't consider the gains a "wager" because they're currently stashed in an online poker account.

I'm not trying to sound like a know-it-all, I just want people to make sure they get sound advice before assuming that they can stash large amounts poker winnings in Netteller or their poker account and not report them.