Full-Time Job + Professional

dmk · #1 03-30-2006, 11:13 AM

This is probably a bit general, but...

I'll use some madeup #s to help illustrate my question.

I work full-time. Lets say my income is 75k. I also play a lot of poker. Lets say my total winnings is 200k, and total losses are 150k (net 50k).

Is it acceptable under these circumstances to file my poker income as a business (i.e. professional)? Although the net income is less than my full-time job, the gross is comparatively large and it appears to show that it is not just a hobby.

What are your thoughts? I pretty much understand how to fill out the Schedule C forms and all, but I want to make sure this is the right way to go.

spatne · #2 03-30-2006, 11:51 AM

For any other kind of self-employment or small business, it wouldn't matter that you have another job or how much you make at that job. If you were to make an extra $5K/year as a consultant or freelance birthday clown, you'd file the sched. C.

Poker should be no different. It's possible that it will look strange to an auditor, but if you can prove that you participate regularly and with clear intent to profit <font color="red">(that's NOT the word-for-word definition of business activity--look it up @ irs.gov)</font> you should be able to make a case.

As always, seek professional advice before making a decision.

MNpoker · #3 03-30-2006, 11:56 AM

My poker earnings (projected based on business plan) will be 1/3 of my full time job earnings.

I'm reporting as a pro in 2006.

Big TR · #4 03-31-2006, 01:13 PM

Just a suggestion, try your tax return both ways, with and without professional. I got a bit larger refund by filing as other income. Plus you don't have to fill out the FICA returns.

DING-DONG YO · #5 03-31-2006, 02:34 PM

[ QUOTE ]
Just a suggestion, try your tax return both ways, with and without professional. I got a bit larger refund by filing as other income. Plus you don't have to fill out the FICA returns.

[/ QUOTE ]

I hope you just didn't file your net wins as other income. There have been numerous discussions on this board about that.

dmk · #6 03-31-2006, 02:59 PM

in my example, there's no possible way that i would get a larger refund (lol @ refund, how about owe less) by filing it as other income.

MNpoker · #7 04-03-2006, 10:19 AM

[ QUOTE ]
Just a suggestion, try your tax return both ways, with and without professional. I got a bit larger refund by filing as other income. Plus you don't have to fill out the FICA returns.

[/ QUOTE ]

If your full time job maxs out the SS there is almost no chance of this. The FICA portion is 2.9% over 90K.

gergery · #8 04-04-2006, 01:28 AM

after talking alot with my CPA, i think the answer to your question is yes, but a lot depends.

-g

MyTurn2Raise · #9 04-04-2006, 04:12 PM

yes....from your example, you can file a professional schedule C thing. You have to prove that you regularly and substantially participate in the business with a profit-seeking motive for schedule C. With those numbers given, I think you must be devoting at least 15 hours per week on a regular basis. easily fits the requirements.