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Old 12-03-2005, 04:00 PM
henrikrh henrikrh is offline
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Default WSOP: Bubbling better than a weak cash?

If you bust out as the last person before hte money Harrah's buys you into next year's event for free ($0 profit, break-even expected value) If you cash just barely in the money you get 12.5k. I recently found out that gambling earnings in the US are taxed almost %40, therefore 12.5k is becomes less than break even.

If you have an extreme short-stack near the bubble and you can either check/fold and someone will likely bust before your big blind, or go all in and have a chance ot double and a chance to get a free entry next year. Could it be more +ev to go all in than to wait for the money?
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Old 12-03-2005, 04:09 PM
jackblack73 jackblack73 is offline
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Default Re: WSOP: Bubbling better than a weak cash?

[ QUOTE ]
If you bust out as the last person before hte money Harrah's buys you into next year's event for free ($0 profit, break-even expected value) If you cash just barely in the money you get 12.5k. I recently found out that gambling earnings in the US are taxed almost %40, therefore 12.5k is becomes less than break even.

If you have an extreme short-stack near the bubble and you can either check/fold and someone will likely bust before your big blind, or go all in and have a chance ot double and a chance to get a free entry next year. Could it be more +ev to go all in than to wait for the money?

[/ QUOTE ]
Gambling winnings aren't all taxed at near 40%. It's only 40% if you're in the that tax bracket. Furthermore, I'm guessing you'd be taxed on the $10,000 buy in from Harrah's also.
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Old 12-03-2005, 04:21 PM
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Default Re: WSOP: Bubbling better than a weak cash?

[ QUOTE ]
Furthermore, I'm guessing you'd be taxed on the $10,000 buy in from Harrah's also.

[/ QUOTE ]

Correct. Anything you recieve, of value, is taxed at the "face" value. Even if you sold your entry fee for less than 10k, you'd be taxed on the 10k.
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  #4  
Old 12-03-2005, 05:30 PM
Greg (FossilMan) Greg (FossilMan) is offline
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Default Re: WSOP: Bubbling better than a weak cash?

I net my tournaments, both now as a pro, and years ago when I filed as an amateur. When I buy in for 10K and win 12.5K, I put down +2.5K on my books. As such, cashing would mean I win 2.5K, and pay taxes on it as income. Thus, I might end up with a net of anywhere from +1.3K to +2.3K, depending upon my other income, and the rate at which my total income is taxed.

If I bubbled, and was given a free entry to next year's event, I would put that down as a 10K loss, as I'm out of pocket 10K, and the item of value I was given has no value until the event takes place next year. If the entry is non-transferable, then I have no possession of it until they sign me up next year, so I think it is perfectly proper to treat it as valueless this year. Of course, next year, should I cash in the event, my entry fee would have to be considered $0. Thus, a 12.5K win would require me to pay taxes on 12.5K, not on just 2.5K.

Later, Greg Raymer (FossilMan)
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Old 12-03-2005, 05:53 PM
sixtwo sixtwo is offline
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Default Re: WSOP: Bubbling better than a weak cash?

what if you won the 12.5k but previously lost in the 5k tourney. do you still report 2.5k on your taxes even though you had lost 5k
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Old 12-03-2005, 08:16 PM
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Default Re: WSOP: Bubbling better than a weak cash?

[ QUOTE ]
what if you won the 12.5k but previously lost in the 5k tourney. do you still report 2.5k on your taxes even though you had lost 5k

[/ QUOTE ]

Now you're in the area that's been already talked about - your income bracket, allowable deductions, etc. There's no blanket answer.
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  #7  
Old 12-03-2005, 09:54 PM
MichaelOar MichaelOar is offline
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Default Re: WSOP: Bubbling better than a weak cash?

Isn't the seat "constructively" received in the year that you win it? Also, I am just about positive that you only have to pay taxes on the fair market value of the seat if you sell it, not the "face" value of the seat.

Damn, I'm not looking forward to my federal income tax exam in two weeks!

Mike
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Old 12-03-2005, 10:01 PM
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Default Re: WSOP: Bubbling better than a weak cash?

[ QUOTE ]

If I bubbled, and was given a free entry to next year's event, I would put that down as a 10K loss, as I'm out of pocket 10K, and the item of value I was given has no value until the event takes place next year. If the entry is non-transferable, then I have no possession of it until they sign me up next year, so I think it is perfectly proper to treat it as valueless this year. Of course, next year, should I cash in the event, my entry fee would have to be considered $0. Thus, a 12.5K win would require me to pay taxes on 12.5K, not on just 2.5K.

Later, Greg Raymer (FossilMan)

[/ QUOTE ]
Have you verified this with a tax professional? I am studying tax in school and checked my notes and I cannot find a clear yes or no answer in regards to this being acceptable to the IRS. Based on what I have learned the 10k entry to next years event would be taxable in the year it was received for the average cash basis taxpayer. However, you have an interesting defense by claiming the entry fee has no value until the tournament starts, so I am not sure what the correct answer is.
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  #9  
Old 12-03-2005, 10:02 PM
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Default Re: WSOP: Bubbling better than a weak cash?

[ QUOTE ]

Damn, I'm not looking forward to my federal income tax exam in two weeks!

Mike

[/ QUOTE ]No kidding
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  #10  
Old 12-03-2005, 10:43 PM
2+2 wannabe 2+2 wannabe is offline
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Default Re: WSOP: Bubbling better than a weak cash?

[ QUOTE ]
Isn't the seat "constructively" received in the year that you win it?

[/ QUOTE ]

using the "accrual method" of accounting, yes it is
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