Nice win, now I have tax questions

[J.R.]

Perhaps this is more a practical consideration, but since I presume party isn't going to open up their records to the IRS, all the IRS has potential access to is your transfers between sites and neteller. If you only reported the transactions between neteller and a site, how would the IRS have any basis to assert you did not appropriately recorded each session, as for all they know you logged onto a site, played on esession and won a whole bunch, which you cashed out. You would only be reported net wins but (other than the smell test's common sense/statistical disbelief that you always won or only played one continuos session), how could the IRS proves you were netting and not recording each winning and losing session individually (assuming a session is when you site down at a table and ends when you get up, even though your chips stay at the site).

[astroglide]

party doesn't have to open up their records. the irs can force you to provide them, and their online account tools do denote session play (dates/times).

[J.R.]

But I believe party only keeps session information for the prior 30 days, and by the time you file your return for the prior year and the IRS flags you and then comes asking questions (not to imply this is an issue that can be dealt with nonchalantly), can you still obtain these records by logging on to party? I guess my point is that while the IRS can issue you a subponea to turn over your records, if those records are not in your possession or custody you can't turn them over to the IRS, so can the IRS issue a fine or penalty against you for failing to maintian an accurate diary as set forth in IRS Publication 529.

[astroglide]

it would be ridiculous of partypoker to not archive the session information (or any other information for that matter). regardless of what poker/reliability criticisms people may make, they know how to run a business.

[Ulysses]

[ QUOTE ]
If I have a neteller account with a neteller ATM card, and withdraw funds that way... is there anyway that can be linked to me as income by the IRS or Revenue Canada (depending on which country I live in)?

Or is this an under-the-table way of dodging tax?

[/ QUOTE ]

Yes, it can be linked to you - but only if they do a full audit. If you are not audited (or are audited and nothing jumps out as unusual to the IRS), you'll be fine.

If, however, the IRS thinks something is fishy (which might happen if they decide your car is too nice or your bank acct has grown too much based on your salary and expenses) and does an investigation, your Neteller ATM transactions on US networks can easily be linked to you. And if this happens, the IRS will try to hit you pretty hard - they are especially aggressive when it comes to things they view as tax evasion tactics using foreign banks.

Databases are scary.

[Ulysses]

[ QUOTE ]
if any of you think the irs is paying any attention at all to the piddly amounts (by that i mean under $100k) you are pulling in and out of your neteller accounts youre way way paranoid.

[/ QUOTE ]

This is just plain false, mike. The IRS pays a lot of attention to anyone who has any non-trivial amount of wire transfers or deposits to their bank. Some relatively low-dollar amts from online poker jump out pretty easily at the IRS in a spot check and audit.

[ QUOTE ]
enjoy poker income for the tax free income that it is.

[/ QUOTE ]

What you've gotten used to from playing live poker just doesn't hold true when it comes to online play.

[fnurt]

[ QUOTE ]
No, we are both right. "Everything has to be recorded on a session by session basis" -- but you forgot to define what a session is. For online purposes, a session is being defined as when you buy-in to when you cash-out, this is what the IRS seems to be interested in.

"Anything that counts 'as cash' and can be quickly converted to native currency is real." Some what correct.
You have to have complete control over the funds.
Chips sitting on a poker site aren't under your control, you have to e-mail a cashout request, they do a review, and then the funds are transfered. When the transfer hits your account, you have income. RE: look at cases involving lottery tickets. You can quickly cash those too, but until you do, you don't have income.

[/ QUOTE ]

We've been over this in great detail in another thread. I don't really want to follow you around having the same discussion a hundred times over.

In short, I believe you are being reckless by giving people this advice in no uncertain terms, as if it were a well-settled issue. The fact is, the issue has not been decided by any court, and I don't think anyone is looking to incur the expense associated with being the first one to litigate the issue.

If you win a bunch of chips at the casino, you have income immediately, even if you wait a year to cash the chips in. It would not be surprising at all for a court to rule that online poker should be treated the same way. If I were the judge, I would go the other way, and back your view... but I'm not going to be the judge, so tread carefully.

[DVO]

"The IRS pays a lot of attention to anyone who has any non-trivial amount of wire transfers or deposits to their bank."

then just cash out via an issued check, no? how would they track that?

[Franchise (TTT)]

[ QUOTE ]
then just cash out via an issued check, no? how would they track that?

[/ QUOTE ]

Many checks deposited/cashed in the US pass through the Federal Reserve banks. They'll know.

http://www.frbatlanta.org/invoke_bro...d=display_body

[Franchise (TTT)]

[ QUOTE ]
In short, I believe you are being reckless by giving people this advice in no uncertain terms, as if it were a well-settled issue. The fact is, the issue has not been decided by any court, and I don't think anyone is looking to incur the expense associated with being the first one to litigate the issue.

[/ QUOTE ]

I fully agree. I'd advise anyone reading these tax threads to not adhere to any specific knowledge, but just to get a general idea of what to talk to with a professional.