A tax Question (nothing about poker)

Cactus Cactus · #1 10-21-2005, 01:20 PM

Poker is my income, however I have been down in Costa Rica looking at business to buy for a week. And that is truely what I am doing. They whole trip cost about 2k. I paid for everything in cash. I hear that you can deduct money spend when you are looking for jobs. Would this classify? I don't have any receipts.

TStoneMBD · #2 10-21-2005, 01:37 PM

i would imagine that you can only deduct money for employment searching if you actually find employment. that money would have to be deducted from your employment income not from your poker income. you also need receipts. the irs isnt going to just allow you to deduct 2k for a vacation of yours just because you claim it as a business venture.

primetime32 · #3 10-21-2005, 01:40 PM

You can deduct costa rican hookers if they help your mental frame of mind while searching for work. i think its form W-69.

BigBiceps · #4 10-21-2005, 02:32 PM

Just because you pay in cash you can still get a receipt.

You can deduct anything you want, but if you don't have a receipt it will be disallowed if questioned.

You can deduct this on schedule A, but it is limited deduction, or if you actually start the business you can deduct it on the schedule C for the business.

TruePoker CEO · #5 10-21-2005, 05:58 PM

Why can't you deduct this as a business expense, assuming you have a business ? After all, you ARE on a business trip here.

Also, if you keep your airline ticket and get a hotel receipt, even from the Del Rey, that should evidence your cash expenses. your difficulty may be in establishing the business purpose.

(If you want to take advantage of the Truepoker Condom Bonus, tell me where you might be playing poker tonight. I can have a couple for you and trust you to remember to open an account when you get home.)

scott2130 · #6 10-21-2005, 06:01 PM

I would be happy to reply to this question and give a professional and correct answer if you pay me in advance. I charge $125.00 an hour and estimate it will take me an hour to research, document, and respond.

Or, if you are "CHEAP" the other answers are pretty good.

Good luck

scott2130 · #7 10-21-2005, 06:06 PM

You can't deduct any expenses from any business you want. It has to be specific. A CEO should know this. Just because your accounting department reimburses you for an expense doesn't me the company can deduct it. There are such things as NON-DEDUCTABLE business expenses. Don't try to make sense of it, it is just the way the US tax code is.

broiler · #8 10-21-2005, 06:33 PM

In the interest of not trying to use this board to promote my own business, I will give you the free answer that is very simple.

Your trip down to Costa Rica is not a job search expense that qualifies for a deduction. Job search expenses are a miscellaneous itemized deduction subject to the 2% of AGI limitation for finding a job in the line of work that you are already in. Since you say that poker is your source of income, I would say that you do not qualify for this deduction.

However, if you end up purchasing this business, the business may qualify to deduct the expense as a start up cost. Start up costs include market research and analysis in connection with the acquisition of an active trade or business. You must make an election in the first year of the business in order to make this deduction. Up to $5,000 of start up costs can be deducted in the first 12 months from the start of operations. You can also elect to amortize any expenses over the first $5,000 over a period of 15 years.

The lack of receipts is generally a bad thing since you would have no documentation of these expenses if you were to get audited.

TruePoker CEO · #9 10-21-2005, 06:44 PM

"You can't deduct any expenses from any business you want."

Yes, clearly that is true, but re-read his post and mine... he was talking about a business acquisition trip, which I thought might be characterized as a legitimate expense for an existing business. (I was asking a question not giving advice.)

If his business sent him here to look for an expansion or acquisition, then the business likely would have a legitimate travel expense and cost of its own. Whether that travel expense would be expensed against business income, some sort of capitalized acquisiiton cost, et cetera is something else. See, response by Broiler below.

The difficulty would be in establishing the legitimate business purpose, as I pointed out. If he really came here for a vacation, he was either spending his own post-tax dollars or he likely would be taxed ultimately on the receipt of any reimbursement from a US company.