My tax preparer told me to claim timed rake as a loss.

[flytrap]

I went in to have my taxes done today. The lady that prepared them has been doing taxes since the sixties, but has never prepared for anyone who's sole wages were from gambling. This is also the first year I filed with only gambling winnings. She was asking me what kind of expenses were involved with gambling, and I mentioned the rake. I explained to her that the live game I play in rakes $8 per half hour, and she seemed to think I could put this in the loss column to help offset my wins, and since it's an expense, i.e., it costs me $16 per hour to 'do my job'. I thought this was very strange, but I'm not going to argue. If I get audited, I can say, "Hey, my tax preparer did this." Does anyone have any thoughts on this? Can timed rake be put toward losses, as long as a record of hours is kept, and even from winning sessions?

[Smart Money]

Of course not. The rake is already accounted for in your profit/loss.

If you sit down with $1,000, and leave with $2,000 after 5 hours (and $80 rake) then your profit is $1,000 and the rake had already been deducted.

Alternatively you could declare your profit to be $1,080 and then deduct your $80, but it obviously amounts to the same thing- just extra work.

[cowboy.up]

Yeah, but this it timed rake - I haven't had any experience with timed rake but do you pay for this through the course of the session with chips in play, or cash out of pocket, or a bill at the end when you cash your chips in?

[nineinchal]

Insofar as the IRS is concerned, the rake is irrelevant. Its gross reciepts minus, gross buy ins. That is the equation.

To deduct the rake or rent is erroneous, since that's already taken out before you go to the cashier and receive your gross receipts.

Maybe you can get real ballsy and deduct the tokes to the parking lot attendant.


Nineinchal CPA

[BillytheKidd]

Time rake would be deductible if you paid it out of your pocket instead of out of your stack, but al is right, it is accounted for in your individual session. Money in pocket before buyin vs. money in pocket at cashout.

[flytrap]

Okay guys thanks for the advice. I didn't think I should be deducting the rake, but my tax preparer insisted, so I went along with her.

[frozzor]

your tax preparer is mentally challenged

[kdotsky]

[ QUOTE ]
your tax preparer is mentally challenged

[/ QUOTE ]

No, they were correct to think it was a deduction. They simply didn't know that players typically pay time out of their stack, so that the rake paid is already accounted for in the player's reported winnings. If anything, it was OPs fault for not saying his winnings include the cost of rake already.

Just because the typical CPA isn't an expert on how playing live poker works doesn't make them mentally challenged.