Is rakeback taxable? - Page 5

Newt_Buggs · #41 10-04-2005, 06:05 PM

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BTW, I am so tired of tax discussions that suggest rake is some sort of expense. Rake is taken out of the pot before anyone wins it. If you put $20 in a slot machine and $98 comes out you just won $78. If you put $20 in a pot and the dealer gives you $98 at showdown you just won $78. The other $2 that was raked is money that never belonged to you and which you didn't win. It has nothing to do with your taxes.

That's why the rebate argument is spurious. You never paid in the first place.

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What about tournaments? When I play SNGs I have to pay $15 straight to the house along with the $200 entry fee.

#42 10-04-2005, 06:59 PM

Lads good points and a good discussion.

Here's a tip for you, move over to Ireland where all gambling income is Tax Free - yeah!!! [img]/images/graemlins/laugh.gif[/img] [img]/images/graemlins/laugh.gif[/img] [img]/images/graemlins/laugh.gif[/img] [img]/images/graemlins/laugh.gif[/img] [img]/images/graemlins/laugh.gif[/img]

Don't know why I read it all, [img]/images/graemlins/confused.gif[/img] just interested to see what the story was with rakeback over the pond.....

theben · #43 10-05-2005, 12:20 AM

i really say no

StellarWind · #44 10-05-2005, 02:10 AM

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What about tournaments? When I play SNGs I have to pay $15 straight to the house along with the $200 entry fee.

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You just bet $215. It all went to the house and the house will pay you any money due at the end. Subtract $215 from whatever you win and that's your gambling winnings or losses.

Tilt · #45 10-05-2005, 04:45 PM

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You just bet $215. It all went to the house and the house will pay you any money due at the end. Subtract $215 from whatever you win and that's your gambling winnings or losses.

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Not necessarily correct. Open your mind for a minute and consider this argument. You bet $200. You paid $15 to an online service provider for arranging this wager. You later get a rebate from this online service provider of $4. Why should the $4 be taxable?

And please, don't cite the comps case again, read the case first, if you do so you will quickly see that the facts and circumstances are very different and that rakeback does not necessarily = comps by precedent.

StellarWind · #46 10-05-2005, 05:37 PM

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Not necessarily correct. Open your mind for a minute and consider this argument. You bet $200. You paid $15 to an online service provider for arranging this wager. You later get a rebate from this online service provider of $4. Why should the $4 be taxable?

And please, don't cite the comps case again, read the case first, if you do so you will quickly see that the facts and circumstances are very different and that rakeback does not necessarily = comps by precedent.

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You realize this is the argument you should hope the IRS never makes?

My view: Pay $215 entry fee, win $1000, pay tax on $785 win, and pay tax on $4 rakeback. In total I pay taxes on $789.

Your view taken to its logical conclusion: Pay $200 entry fee, pay $15 service fee, win $1000, pay tax on $800 win, and pay no tax on rakeback. If I am a professional player I deduct the $11 net service fee as a business expense and pay taxes on $789. But if I am an amateur I cannot deduct the $11 net fee and must pay taxes on $800. Oops.

This is why the whole thread is dumb. You already subtracted the money from income when you computed how much you won in the tournament. Now you want to claim it's a nontaxable rebate when you get the money back. That means you are trying to deduct an expense you didn't actually pay in the end. The IRS is never going to allow that in a million years.

Fortunately your analogy is flawed. I do not have separate bets with everyone who entered the tournament. My only contract is with the poker room. I bet $215 on the outcome of this tournament and the room is legally obligated to pay me if I win. Even if everyone else in the tournament used fake credit cards and fled to Rio without ever making good.