Taxes & corporations - Page 3

astroglide · #21 09-25-2004, 04:51 PM

you are completely wrong. look at http://www.gambling-law-us.com/State-Law-Summary/ , and verify it with the actual state statutes if you'd like. in most states online gambling is illegal as it falls under the header of unsanctioned gambling. it is not social gambling. per state law, online gambling is illegal virtually everywhere in the usa (but the severity of the penalty varies).

bicyclekick · #22 09-25-2004, 05:12 PM

Except for the fact that when I talked to the IRS they said it's legal. My CPA also went to a conferance about a month ago that dealt with gambling and they said the same thing.

You may see some goofy technicality that makes you think it's illegal but take a look at the way things are going. Look at TV, don't you think there would be a lot more said by the networks if it was illegal...seeing how tons and tons of players have qualified online.

I suppose you've quit playing in the party 15/30 game now too huh. Now that would be funny.

astroglide · #23 09-25-2004, 05:30 PM

you can talk to whoever you'd like, and they can say whatever they'd like. the gambling tax laws are written in plain english, and i find them very easy to understand. if you want the most respected expert opinion, talk to rbstaxes. they are enrolled agents (higher than cpas - eas are tax-specific, cpa is for general accounting). they also handle the taxes for lots of wpt players, etc and are based in vegas. i read the laws and came to the 'bad' conclusions, was advised as you were by a corporate tax attorney, and then confirmed the 'bad' conclusions by talking to rbstaxes and reading their mini-book on the subject.

filing as a recreational player through a business to lump wins/losses, get writeoffs, and not have to pay self-employment taxes is not legal. to get the benefits, you have to pay self-employment tax. that is why the professional filing option exists in th tax code.

you can file your taxes as you want. fill in any numbers you want on any forms. that doesn't mean it's legal.

and no, i haven't quit playing in the party 15/30 game but i'm aware of what i am risking. i even paid an attorney to look at the gambling statutes in my state to see if there had been any prosecutions or appeals filed on it.

as for the wpt players, the government has taken steps to go against them by going after advertising of online sites. as with other things, their #1 targets are the drug dealers. if they break the supply chain there is no way to use.

Kurn, son of Mogh · #24 09-25-2004, 06:16 PM

What part of the column *express internet prohibition* is unclear to you?

bicyclekick · #25 09-25-2004, 07:03 PM

[ QUOTE ]
What part of the column *express internet prohibition* is unclear to you?

[/ QUOTE ]

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re:astro - and what if you get auditted...where are you going to say that couple hundred thousand came from? If you really think it's illegal you may as well not pay taxes cause you're screwed if you get cought anyhow. I suppose it would probably be less severe than the fruad penalty...but I don't know...it's not illegal so it's a moot point.

astroglide · #26 09-26-2004, 01:17 AM

what part of gambling is illegal unless it is state-sanctioned, and online gambling is not state-sanctioned doesn't register with you? read the statutes. you are completely wrong.

astroglide · #27 09-26-2004, 01:20 AM

as is famously discussed, al capone went down for tax evasion, not for the crimes he committed to make his money. you can't get caught from an irs audit. it's what's referred to as a "silver platter" situation, the irs can't hand you over when all they were doing was audited. this is the same way that evidence found in an illegal search can't be used in court, you can announce that you are somebody's drug dealer at at their murder trial and not be busted, etc. if the irs could turn you in on an audit, you could probably invoke the 5th amendment to skip whatever illegal aspects there were to avoid incriminating yourself.

just found a particularly amusing example: http://www.ksrevenue.org/perstaxtypesdrug.htm

bicyclekick · #28 09-26-2004, 02:07 AM

That's too funny.

lacky · #29 09-26-2004, 06:34 AM

I'm pretty sure it works like any other business. This is how my accountant explained it. I'm not an accountent though, so you'll have to talk to yours.

Self employment tax is 15.3%. With the corperation, all earnings are corperate earnings and are not subject to self employment taxes. But you work for the corperation so
you half to pay yourself a "reasonable" salary. That salary is the the only part of your income subject to selfemployment taxes. The rest of the money comes from corperate divideds and are taxed as dividends. So, say you make $30000 and pay yourself a salary of $833 per month, $10000 per year. So the savings from having the corperation is $20000 x 15.3%= $3060. Say you make $60000 and pay yourself $15000. Then you would save $45000 x 15.3%= $6885. I think devidend income is also taxed at a lower rate, but I'm not sure on that. I haven't done my own taxes in 6 years. My accountant understands it though. It did cost $750 to set up the corp, and about $550 a year after that to the accountant for record keeping and tax prep, so it's not all savings, but still a good deal.

I'm don't know what chages it would make if you have another source of income. I don't so I never asked.

Kurn, son of Mogh · #30 09-26-2004, 10:04 AM

When the cops bust a bookie, do they comb through his records and arrest all his customers? No. Perhaps it is technically illegal to participate in online gaming in most states, but the only places the player risks running afoul of the law is in those states where *participation* is expressly forbidden.

I've been associated with "non-state-sanctioned" gambling since birth, and I'm quite aware where the real risks lie.