Taxes & corporations

[Nightwish]

So is there anyone out there that has looked into forming an S corporation for the purposes of (legally) reducing one's tax burden from pro or semi-pro poker play? Any information that you guys are willing to share?

[astroglide]

there is no benefit to doing it if you file legally

[Nightwish]

Can you please elaborate or at least point me to a link where I can read the details?

[Jaquen H'gar]

A good accountant/CPA is worth the cost when starting out. I spent hours poring over tax documents on the Net and working up a plan, only to meet with my CPA and he immediately dismissed my ideas out of hand. He then took two minutes to explain why my thinking was wrong and how I could do it much easier and legally save much more in taxes/filing fees, etc. He was also very helpful on where and how to store the bankroll to provide extra income while maintaining accessibility.

My dad as a small business owner taught me two lessons which I still adhere to today. One: the best way to avoid an IRS audit is to have a CPA sign off on the return. Two: always bring your lawyer to a high level business negotiation. Both of these tell people don't f with you.

The right accountant may not know much about gambling but he does know a lot about businesses and taxes. A CPA's fees are like the rake: very signficant when the stakes are low but negligible when the stakes are high.

[astroglide]

http://www.rbstaxes.com/book.htm

gambling is subject to gambling tax law. the law is not avoidable if you decide that "my business is gambling". you are still subject to gambling tax law, which prohibits lumping.

[Kurn, son of Mogh]

Not necessarily. If the IRS accepts you filing as a "professional", you can file on schedule C (Self Employment) and deduct the appropriate business expenses (say you use one room specifically as your home office - you can deduct a portion of rent). You can then take depreciation on your computer, deduct Poker Tracker as a business expense, etc.

The hard part is getting the IRS to agree that you are a professional.

[astroglide]

that is a provision of the gambling code. the irs doesn't need to agree that you are a professional, you would have to get noticed and be unable to prove it. since the definition is that you play regularly and with the expectation to win, many players could do it (and pokertracker/statking makes the proof easy). the rub is that you pay self-employment taxes, something i believe nightwish was seeking to avoid by filing as a recreational gambler, lumping his wins and losses as well as deducting through a business.

[bicyclekick]

I do'nt know about you, but having to pay 15% (self employment tax) is soooooooooooooooooooo much more than the ability to write off all that stuff. I'd rather be recreational. I'll have to talk to my CPA again cause she wanted me to file professionaly as if it was an advantage and said that I would have no problem showing that most of my income comes from pokre.

[axioma]

thank got i live in the U.K. where gambling profit is untaxable! [img]/images/graemlins/cool.gif[/img]

[astroglide]

internet gambling is illegal all over the usa too. neat huh?