Understating poker winnings

[pyroponic]

I know this may be a controversial subject, and i'm JUST SPECULATING.

Let's say that you make a fairly large of money playing online poker, and you want to reduce the amount of taxable income. What are your options?

1. Get a DBA and run a self-employed business, reinvesting your winnings as capital and employee benefits, e.g. DVDs for the employee lounge, computer monitors, company-comped meals, books, school tuition, anything that could apply to poker even in indirect ways. You could prorate certain items (say 50% of tution because half of your education like math/stats/psychology helps your poker game)

2. Since you're already gambling, what is stopping you taking a few hundred dollars in cash to the casino every week and report them as losses? What makes it implausible that a profesionnal/semi-professional player goes to the casino regularly and loses some of the time?

3. Taking all total bets you made, and calculate a certain percentage of "rake," which could count as an expense (if you're running a business). Say you're playing $2/4, you contribute $10 to a $20 pot. The winner (not you) scoops the pot, the pot is raked $1.00. I don't see why you couldn't say I paid a $.50 expense known as rake expense on the hands you DON't win. YOUR money is still being raked whether you win it or not, and that's a cost of doing business (expense).

4. Any others?

What are your opions about #1 and #2.

Thanks

[StacysMom]

I had thought about reporting irl losses to offset my online wins too. but i doubt that upon and audit they would accept consitent losses irl, when u are doing so well online. It seems to me they might seperate the 2 mediums and only allow u to be a professional in the one u are making money.

but i dont know, just my thoughts, interested in what others think

i could also see playing other games that u habitually lose at, maybe craps or something fitting into a similatr situation

[pyroponic]

Yeah I think if they don't accept the losses that'd be bullshit. Poker IS gambling, I think anyone would agree on that. Any inherent problem a professional/semi-professional player faces are bankroll swings, hell you could even show logs of you consistently losing $100-200 swings at say 4-tables of $2/4 which are just the regular variation you get when you play poker. That would show that it's not like you're sitting down and winning every hand. What's to say that you also just play poker online, because you don't trust the non-skill casino games, and prefer to play those live. I don't see why someone who plays poker for a living or for extra income ALSO can't play craps/bacarrat/blackjack, gambling is gambling.

[TMac]

I was a state tax auditor for 9 years and have also reported gambling winnings and losses.

I don't think the IRS would disallow your losses from live poker games as long as you document them. You should keep a notebook with the following details: amount of loss, casino name, game, table number, and a couple of people present at the time, either players or better employees. The more detail you have, the harder it is for the IRS to disprove.

As for pit games, why not just give to charity. For example, you drop $20 cash in the collection basket at church every week. That would be 100% deductable.

Todd

[pyroponic]

How about cashing some of your winnings via check and cashing them at some liquor store? I figure they would audit your bank accounts and your personal records rather than your actual poker account.

[Jaquen H'gar]

And just how do you plan on proving your losses? If you use deductions, the burden of proof is on YOU to prove the deduction, not on the IRS to disprove the loss.

There is a way, of course, but you are still going to have to give up a percent unless you are an advantage player at casino table games. Of course, most AP's don't play under their real name which negates this as a source of hiding poker income. Using an alias, though, does wonders for hiding BJ income.

[Jaquen H'gar]

[ QUOTE ]
How about cashing some of your winnings via check and cashing them at some liquor store? I figure they would audit your bank accounts and your personal records rather than your actual poker account.

[/ QUOTE ]

And what, pray tell, are you going to tell the IRS when they request to see your Neteller logs? That your dog ate the password?

[DeuceKicker]

3. There's nothing to say you don't lose at a B&M casino, but you might have a tough time convincing anyone that you made six figures last year killing online poker but are losing just as much or more at a B&M.

4. Your record keeping would already take the rake into account. If you say you went to ABC casino, sat down with $1000, and walked out six hours later with only $350, that includes the rake. It doesn't really matter if you lost $650 to a bad beat, chasing longshots, overtipping the waitress, or the rake, the net result is that you walked out a loser for the session. (Some people have recommended taking slightly more detailed notes than I layed out, but it still sounds like you're trying to deduct the rake twice. That aint gonna fly.)

[Al P]

"Play" the slots at B&M casino while using an ATM to withdraw the money from your poker funded account.

Collect losing lottery tickets from every gas station and grocery store you go to.

[DesertCat]

[ QUOTE ]

Collect losing lottery tickets from every gas station and grocery store you go to.

[/ QUOTE ]

Some gambler just got busted for doing this with racing slips. Judge didn't buy it after prosecutor pointed out the footprints on many of them.