Ed Miller\'s Tax Article
 

I'd just like to point a few things about the IRS and taxes more generally.

The IRS neither makes tax law nor decides what tax law means. When dealing with the IRS/taxes, it helps to look at it as an adversarial process. Congress and the Treasury Department make tax law and the Courts decide what that law means in questionable or ambiguous situations. IRS publications are great if you're just looking to avoid trouble, but if you are trying to pay the minimum possible without breaking the law, they are a very poor source to look to. Invariably, the IRS will interpret the law in a light that is most favorable to it (not necessarily correctly). Dealing with taxes and the IRS is like playing a game. You must follow certain rules, but those rules are a LOT wider than the IRS would have you believe. There is a huge difference between commiting fraud in the form of tax evasion and being aggressive when computing your taxes. There is also a difference between doing things that could potentially result in penalties/fines/interest from the IRS and things that could result in criminal liablity. Where exactly these lines lie is not readily apparent, so it would be ill-advised to do anything too questionable on your own if you don't have some degree of expertise in the area, but if you are looking at large tax burden, it would be well worth it to hire a competant professional that will act very aggresively on your behalf. Less than 2% of all individual returns get audited, and that <2% is NOT a random sampling of all returns. The IRS looks for certain red flags in deciding who gets audited, and if your return does not have any of these red flags, the chance you will get audited is very small. If make sure to stay below the line of potential criminal liability, then it really becomes a matter of weighing your savings against the cost of an audit (including penalties and interest should decide not to fight the matter in court) X the liklihood of an audit.

I've noticed a tendency on these boards to make the IRS seem a lot more powerful and scary than it really is, and this article had a bit of that tone to it.

Re: Ed Miller\'s Tax Article
 

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I've noticed a tendency on these boards to make the IRS seem a lot more powerful and scary than it really is, and this article had a bit of that tone to it.

[/ QUOTE ]

To be sure, the IRS is an organization with an almost impossibly complex mandate, and it's not exactly a well-oiled machine.

However, failing to report tens of thousands of dollars in poker income will not be seen by the IRS or any tax court as a "gray area." Suggesting otherwise (not that you did) is misleading and can get people into serious financial, if not criminal, trouble.

Re: Ed Miller\'s Tax Article
 

My main point was don't just look at the IRS publications and forms, plug the numbers in, and cut a check for that amount. Doing so would be giving up too much too easily.

If you can make a good faith argument based on the law as to what you are doing, there is plenty of play in the joints here. As I said earlier if you don't know a lot about these things, hire a CPA or a tax attorney, and hire a pitbull not a lapdog.

Outright not reporting your income is a stupid gamble because it's impossible to asses what the consequences and chances of getting caught are ahead of time. Many times it will come down to whether a specific bureaucrat decides to be a prick about it or not, and if he does, the consequences could be VERY severe.

I'd be willing to bet that among winning poker players at large, the vast majority either don't report or severely under-report their winnings, and this is certainly a bad idea. But here I think many are paying more than they have to because they blindly follow whatever instuctions the IRS gives them.

Re: Ed Miller\'s Tax Article
 

Yea, good post.

Couple questions I have:

Anyone know if there are any good online sources for finding a cpa/tax professional?

Is it advisable to get one in your area/state that you can contact in person, or is going online/by distance fine/

Re: Ed Miller\'s Tax Article
 

[ QUOTE ]
My main point was don't just look at the IRS publications and forms, plug the numbers in, and cut a check for that amount. Doing so would be giving up too much too easily.

If you can make a good faith argument based on the law as to what you are doing, there is plenty of play in the joints here. As I said earlier if you don't know a lot about these things, hire a CPA or a tax attorney, and hire a pitbull not a lapdog.

Outright not reporting your income is a stupid gamble because it's impossible to asses what the consequences and chances of getting caught are ahead of time. Many times it will come down to whether a specific bureaucrat decides to be a prick about it or not, and if he does, the consequences could be VERY severe.

I'd be willing to bet that among winning poker players at large, the vast majority either don't report or severely under-report their winnings, and this is certainly a bad idea. But here I think many are paying more than they have to because they blindly follow whatever instuctions the IRS gives them.

[/ QUOTE ]

Ya, I definitely agree. I recommend (in addition to hiring a CPA which is INDISPENSIBLE.. note the caps) a book called Lower Your Taxes - Big Time! by Sandy Botkin. Despite the cheesy name, it's a pretty serious look at what is and isn't deductable, and how to structure your life and finances to maximize the amount of your deductible expenditures.

Re: Ed Miller\'s Tax Article
 

Does anyone know or can point me to a source on how poker winnings are taxed in Canada?

Thanks in advance.

Re: Ed Miller\'s Tax Article
 

Online gambling businesses are currently illegal in the U.S. It could be a mistake to assume that will continue indefinitely. A political solution could appear that makes Party and friends 100% legitimate. Certainly there are many people who would like to see that happen including U.S. business interests that would like to join the game.

There will be a price for legitimacy. The offshore businesses will be required to cooperate with the IRS, FBI, and every other Government agency that cares about financial transactions. Years of old records could be turned over to the IRS in the blink of an eye. No casino is going to risk their access to the U.S. market by refusing to comply with a rule they don't even care about.

Re: Ed Miller\'s Tax Article
 

Makes me glad to be British
(i) no taxes on gambling income
(ii) no tax on overseas earnings not repatriated.

Re: Ed Miller\'s Tax Article
 

From what I can gather, poker winnings are not taxable as long as they are not your main (only) source of income.

Re: Ed Miller\'s Tax Article
 

Party doesnt have your taxpayer ID

Re: Ed Miller\'s Tax Article
 

We recently had a little discussion about this on the news forum, but I can't find the link. Anyway: all blackjack and poker winnings are not taxable in Canada. Any taxes taken from these winnings in foreign countries (eg: winning a chunk of money in a poker tournament in Vegas) can be reclaimed.

Again, I can't stress enough, DON'T TELL THE POLITICIANS!

Re: Ed Miller\'s Tax Article
 

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Party doesnt have your taxpayer ID

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Yes, that should definitely make IGM's records unusable to the IRS [img]/images/graemlins/tongue.gif[/img].

Actually it's not even true for most of us. Just because you never explicitly gave IGM your SSN doesn't mean they don't have it.

Re: Ed Miller\'s Tax Article
 

Note to everyone- this is for CANADA. In the USA, all session gambling income is taxable, whether legal or illegal sources and whether you ended up with an actual profit or not.

As the OP said, if you have a lot of income to defend, getting a pro to squeeze out the lowest payment might make sense. For many recreational gamblers, following the IRS guidelines is probably most cost-efficient.

(How do I know? I called the IRS to check on my filing procedures and asked some questions)

The cost/benefit ratio of ducking taxes may not be worth it if the IRS goes backwards in an audit, as they're sure to do. Unless you can prove this is your first year of gambling....

Re: Ed Miller\'s Tax Article
 

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getting a pro to squeeze out the lowest payment might make sense. For many recreational gamblers, following the IRS guidelines is probably most cost-efficient.

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There are many areas in life where we can comfortably cut corners to curtail costs ... hiring a skilled CPA I don't believe is such an area. Mine has made me tens of thousands of dollars above and beyond his fees; I'm sure others could attest likewise.

There's a reason Ed wrote:

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hiring a CPA which is INDISPENSIBLE

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Barron Vangor Toth
BarronVangorToth.com

Re: Ed Miller\'s Tax Article
 

IF you want to be an Internet pro-gambler that badly, move to Canada. [img]/images/graemlins/grin.gif[/img]

Re: Ed Miller\'s Tax Article
 

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...it really becomes a matter of weighing your savings [generated by not paying taxes] against the cost of an audit (including penalties and interest should decide not to fight the matter in court) X the liklihood of an audit.


[/ QUOTE ]

The above post (and Ed's original article) suggest that one should pay one's taxes to mitigate the risk of being audited or penalized by the IRS.

Is it so ridiculous to suggest that we ought to pay the proper amounts because it's the law and following the law is the right thing to do?

Put another way, if I could give you a rock-solid 100% guarantee that you would NOT be audited and/or penalized for failing to report your online earnings, how would that change your outlook?

Re: Ed Miller\'s Tax Article
 

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Is it so ridiculous to suggest that we ought to pay the proper amounts because it's the law and following the law is the right thing to do?

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The part in bold is an opinion that not everyone will share. However, the risk of being audited is completely objective meaning it can be logically argued just like any other poker problem. Furthermore, people who always obey the law and who consider cheating on their taxes dishonest are probably doing all this research whether Ed Miller warns them to do so or not.

Re: Ed Miller\'s Tax Article
 

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The part in bold is an opinion that not everyone will share. However, the risk of being audited is completely objective meaning it can be logically argued just like any other poker problem.


[/ QUOTE ]
That's really my point. Some things should not be quantified like "other poker problems."

For example: let's say that you've cashed out of your game at a local cardroom and are walking toward the exit. You see a guy with a $5,000 stack of 100s sticking way out of his back pocket. You believe there is a 98% chance that you could pick the guy's pocket and get way with it. If caught, you will have to pay triple that amount as a fine, $15,000 (criminal charges are an impossibility in my example). This is an easily quantifiable situation, where stealing the money is +EV. But would the average 2+2er do it? I'd bet not, because (I hope) the average 2+2er believes that stealing is wrong.

All I'm saying is that it's somewhat surprising to me that amid a flurry of posts about the IRS and taxes, no one has said simply, "you should pay your taxes because it's the right thing to do."

Re: Ed Miller\'s Tax Article
 

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"you should pay your taxes because it's the right thing to do."

[/ QUOTE ]


Agreed.

Plus, from what I've learned from the prison documentary Oz, it's not a place I want to go.

Barron Vangor Toth
BarronVangorToth.com

Re: Ed Miller\'s Tax Article
 

[ QUOTE ]
[ QUOTE ]

The part in bold is an opinion that not everyone will share. However, the risk of being audited is completely objective meaning it can be logically argued just like any other poker problem.


[/ QUOTE ]
That's really my point. Some things should not be quantified like "other poker problems."

For example: let's say that you've cashed out of your game at a local cardroom and are walking toward the exit. You see a guy with a $5,000 stack of 100s sticking way out of his back pocket. You believe there is a 98% chance that you could pick the guy's pocket and get way with it. If caught, you will have to pay triple that amount as a fine, $15,000 (criminal charges are an impossibility in my example). This is an easily quantifiable situation, where stealing the money is +EV. But would the average 2+2er do it? I'd bet not, because (I hope) the average 2+2er believes that stealing is wrong.

All I'm saying is that it's somewhat surprising to me that amid a flurry of posts about the IRS and taxes, no one has said simply, "you should pay your taxes because it's the right thing to do."

[/ QUOTE ]

$5000 in some guy's back pocket rightfully belongs to that guy. It's kind of hard to dispute that. (At least vis a vis some random person walking up behind him and seeing the money)

Does 1/3 of what I make this year rightfully belong to the U.S. government? At the very least this matter is open for debate from a moral standpoint. In fact, many would argue that paying taxes at these rates is manifestly immoral for a wide variety reasons. Some people view paying taxes under the current IRC as each individual paying their rightful share of the cost necessary to run society, while others look at paying taxes under the current IRC as being shaken down by people with lots of guns and lots of cages who are just going piss the money away anyways.

Re: Ed Miller\'s Tax Article
 

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IF you want to be an Internet pro-gambler that badly, move to Canada. [img]/images/graemlins/grin.gif[/img]

[/ QUOTE ]

Income for US citizens is taxable worldwide.

Re: Ed Miller\'s Tax Article
 

[ QUOTE ]
Does 1/3 of what I make this year rightfully belong to the U.S. government?

[/ QUOTE ]

Yes. Unless you go through the steps of renouncing your citizenship, you are subject to the tax laws. Deal with it.

Re: Ed Miller\'s Tax Article
 

Ed Miller's article mentions raised eyebrows from the IRS over a young person having $200K in their bank account with nearly no reported income.

Here's what I'm curious about...

I completely understand why the IRS would be curious about that kind of bank account balance (or even a quarter that much) when nearly no income is reported. What I am curious about is how the IRS comes across that information to begin with. As far as I know, they don't have constant visibility into banking accounts. Yes, they can subpoena records in order to get that visibility, but then the question is what would prompt that subpoena in the first place.

This is not at all my personal situation, let me make this clear. However, let's say that I do have $200K in a bank account. As long as I'm not doing anything that is widely visible with that money, such as buying a car or house with cash, how is the IRS going to know that I have that much money in the bank?

Re: Ed Miller\'s Tax Article
 

Banks are required to report suspicious activity to the Treasury Department. Some "suspicious activity" threshholds are known (for example, banks report cash transactions of over $20,000--edit: I'm not 100% sure the threshhold remains 20K). Some activity is secret [think: wire transfers from the mid-east], and other threshholds are discretionary [If your local bank manager thinks something weird is going on, he may contact authorities].

So, it is possible that the IRS could find out about your bank balance. However, it's highly, highly unlikely that a 200K account with normal-sized deposits coming in would raise any suspicion at all. That's (relatively) small potatoes.

OTOH, if, after returning from Party Million Cruise, you visit your local BofA branch with $400,000 cash stuffed in your duffel bag, I think you can expect a visit from some kind IRS representatives.

Re: Ed Miller\'s Tax Article
 

Financial institutions also report things like interest paid.

BTW, you poker-playing guys with large amounts of unreported income, all it takes is one pissed-off dumped girlfriend or anyone else who has a grudge to drop a dime to the IRS (in return for a percentage of your back taxes, penalties, and interest), and you will have the inquisition at your door.

If the IRS finds you with substantial unreported gambling income, no amount of playing Mickey the Dunce will save your ass. Tax avoidance is legal. Overly enthusiastic tax avoidance gets you penalties and interest. Tax evasion (and failure to report substantial income is tax evasion) can get you the federal slammer and penalties and interest.

If you have unreported gambling income, you better be nice to your girlfriend and anyone else who knows or suspects you are in the chips and not sharing with your uncle.

Re: Ed Miller\'s Tax Article
 

I busted my ass last spring working to comply with IRS guidelines that gambling income be reported on all winning sessions (as opposed to in aggregate). PokerTracker does NOT make this easy for anyone who multitables, moves tables, or takes very short breaks during a given session. In fact, the term 'session' does not have a tried and true definition for these purposes as far as I can tell, though Russ Fox has a good discussion of the matter on his web page.

Here's my question: for those of us careful enough to make a good faith effort to comply, is there an easier means of culling through PT data to aggregate our winning sessions (which we'll add to our AGI when filing) and losing sessions (which we may or may not be able to utilize as a deduction depending on how much the total is and whether we prefer to take the standard deduction). I gather that those users with a better understanding of database queries might be able to come up with a means of doing this in an automated fashion.

The way I did it in March was to print out my sessions from 2004 and go through them by hand linking the table entries that were from the same "session." I defined "session" as any poker playing that was immediately continuous with other poker play (e.g. I started at one table at 2pm and then added another at 2:15 while still playing the first table), or any poker play within 10 minutes of prior poker play (e.g. I started at 2pm, played one table until 2:45, took a 10 minute break to go to the john, and then resumed play at 2:55). Once I'd linked the sessions, I used a calculator to add up the total for each session. I aggregated all the winning sessions and all the losing sessions separately, and had my numbers. Then I did it all again to make sure it was right. This process SUCKED and was very time consuming.

The aggregate of the winning sessions was almost 200% of my net win if I recall correctly. High variance play will do that to you -- you often have big winning sessions and big losing sessions, so the delta between the two will be large. A player with lower variance might have aggregate winning sessions of maybe only 150% of his actual net win. So a high variance player who has a net win of $10,000 might actually owe more taxes than a low variance player who has won $12,000. Yuck! Lesson: if there are ways to maintain EV while lowering variance (and I know usually trying to lower variance is a folly), you may actually profit by doing so because your tax liability is reduced. Keep that in mind.

So, has someone come up with a better approach for adding up winning and losing sessions? As an aside, I'm a small fry in terms of the amount of money involved in my poker play -- I didn't have more than 2K hands at any level above 3/6 in 2004, and my overall winnings/aggregate session winnings were fairly deminimus relative to the salary from my real job... less than 10%. I gather this is a much bigger problem for online pros who make the big bucks.

Re: Ed Miller\'s Tax Article
 

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Banks are required to report suspicious activity to the Treasury Department. Some "suspicious activity" threshholds are known (for example, banks report cash transactions of over $20,000--edit: I'm not 100% sure the threshhold remains 20K).

[/ QUOTE ]

I worked for a bank about 6 months ago and IIRC the threshold was smaller but I'm not positive and it may have changed since then. Also, I'd like to add that the paperwork involved with reporting large transactions includes requesting information from the accountholder, including your occupation which will result in a hammering if you're not reporting gambling income and don't have a day job.

Re: Ed Miller\'s Tax Article
 

For what it's worth, this article talks about the nature of reporting income in poker tournaments (I guess cash game players are still on their own):

http://www.gambling-law-us.com/Artic...-debunking.htm

I lurked around the IRS web site, and one of their documents listing priority issues in 2005-2006 is to create a Revenue Procedure on withholding at source requirements for poker tournaments.

Re: Ed Miller\'s Tax Article
 

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[ QUOTE ]
Does 1/3 of what I make this year rightfully belong to the U.S. government?

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Yes. Unless you go through the steps of renouncing your citizenship, you are subject to the tax laws. Deal with it.

[/ QUOTE ]

Legal/illegal doesn't equate to right/wrong.

Re: Ed Miller\'s Tax Article
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
Does 1/3 of what I make this year rightfully belong to the U.S. government?

[/ QUOTE ]

Yes. Unless you go through the steps of renouncing your citizenship, you are subject to the tax laws. Deal with it.

[/ QUOTE ]

Legal/illegal doesn't equate to right/wrong.

[/ QUOTE ]

Im not sure why paying taxes on gambling winnings is a question of right/wrong, unless you're challenging the entire legitimacy of the tax system. Taxes are a part of life. We all agree implicitly to pay them. Sales, income, property, estate, etc.

Re: Ed Miller\'s Tax Article
 

[ QUOTE ]
I busted my ass last spring working to comply with IRS guidelines that gambling income be reported on all winning sessions (as opposed to in aggregate). PokerTracker does NOT make this easy for anyone who multitables, moves tables, or takes very short breaks during a given session. In fact, the term 'session' does not have a tried and true definition for these purposes as far as I can tell, though Russ Fox has a good discussion of the matter on his web page.

Here's my question: for those of us careful enough to make a good faith effort to comply, is there an easier means of culling through PT data to aggregate our winning sessions (which we'll add to our AGI when filing) and losing sessions (which we may or may not be able to utilize as a deduction depending on how much the total is and whether we prefer to take the standard deduction). I gather that those users with a better understanding of database queries might be able to come up with a means of doing this in an automated fashion.

The way I did it in March was to print out my sessions from 2004 and go through them by hand linking the table entries that were from the same "session." I defined "session" as any poker playing that was immediately continuous with other poker play (e.g. I started at one table at 2pm and then added another at 2:15 while still playing the first table), or any poker play within 10 minutes of prior poker play (e.g. I started at 2pm, played one table until 2:45, took a 10 minute break to go to the john, and then resumed play at 2:55). Once I'd linked the sessions, I used a calculator to add up the total for each session. I aggregated all the winning sessions and all the losing sessions separately, and had my numbers. Then I did it all again to make sure it was right. This process SUCKED and was very time consuming.

The aggregate of the winning sessions was almost 200% of my net win if I recall correctly. High variance play will do that to you -- you often have big winning sessions and big losing sessions, so the delta between the two will be large. A player with lower variance might have aggregate winning sessions of maybe only 150% of his actual net win. So a high variance player who has a net win of $10,000 might actually owe more taxes than a low variance player who has won $12,000. Yuck! Lesson: if there are ways to maintain EV while lowering variance (and I know usually trying to lower variance is a folly), you may actually profit by doing so because your tax liability is reduced. Keep that in mind.

So, has someone come up with a better approach for adding up winning and losing sessions? As an aside, I'm a small fry in terms of the amount of money involved in my poker play -- I didn't have more than 2K hands at any level above 3/6 in 2004, and my overall winnings/aggregate session winnings were fairly deminimus relative to the salary from my real job... less than 10%. I gather this is a much bigger problem for online pros who make the big bucks.

[/ QUOTE ]

I'd really like to hear an answer to this and to the question about whether it is best to have a local CPA versus an out of state CPA. I really do not play enough yet for what I do to make a difference but I want to inform myself and begin doing the right thing as early as possible.

Thanks in advance and thanks for the great topic.

Re: Ed Miller\'s Tax Article
 

I'd like to know if I have the correct understanding of this tax business. Suppose a player plays 200 sessions in a year. In 100 of them he is up $300 and in the other 100 he is down $200. He is supposed to report $30,000 in "winnings"? Even though he only nets $10,000. You can even set up numbers that don't seem implausable which result in a profit before taxes but a loss after tax.

What about a player who has a winning 9 months but loses it all in the last quarter? Is he liable for taxes on poker winnings in a losing year?

If I start winning consistantly I may just feel the need to do it in a different country.

Thanks for any replies.

Re: Ed Miller\'s Tax Article
 

Pretty much yes. You must report your total winnings. However, you can deduct your total losses up to the amount of your total winnings, in most cases. What you CANNOT do is report a "net" win and leave it at that. You also cannot claim more losses than winnings.

For example, you play 1000 sessions and win $100 in 550 and lose $100 in 450, you must report total winnings of $55,000 and deduct total losses of $45,000. What you cannot do is simply report winnings of $10,000.

It is an enormous pain in the ass.

Re: Ed Miller\'s Tax Article
 

[ QUOTE ]
Pretty much yes. You must report your total winnings. However, you can deduct your total losses up to the amount of your total winnings, in most cases. What you CANNOT do is report a "net" win and leave it at that. You also cannot claim more losses than winnings.

For example, you play 1000 sessions and win $100 in 550 and lose $100 in 450, you must report total winnings of $55,000 and deduct total losses of $45,000. What you cannot do is simply report winnings of $10,000.

It is an enormous pain in the ass.

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If you can prove that you approach poker as a business rather than as a hobby, you can file a Schedule C and treat poker winnings and losses slightly differently (as if they were business revenues and costs). That will often be the superior option for a serious player.

Re: Ed Miller\'s Tax Article
 

[ QUOTE ]

If you can prove that you approach poker as a business rather than as a hobby, you can file a Schedule C and treat poker winnings and losses slightly differently (as if they were business revenues and costs). That will often be the superior option for a serious player.

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This is absolutely correct and I should have mentioned it in my OP. I was not thinking of professional players.

However, anyone considering this route should be aware that the IRS imposes very high standards for filing as a professional gambler. You really ought to get professional advice before persuing this path.

Re: Ed Miller\'s Tax Article
 

the IRS imposes very high standards...

Read my original post again. The IRS doesn't "impose" anything. They don't have the authority. They offer their interpretation of the law and do so in a light that is most favorable to them. Just because they say it doesn't make it so.

Re: Ed Miller\'s Tax Article
 

The reason that the poker tournament winnings is on the IRS radar is because they want the fixed dollar limit to apply, instead of the multiple of amount wagered. The problem is that the IRS issued a private letter ruling back in 1984, which set up the rules in their current form. The IRS priority is to get a law change in order to get rid of the private letter ruling that they don't like any longer.

Re: Ed Miller\'s Tax Article
 

[ QUOTE ]
the IRS imposes very high standards...

Read my original post again. The IRS doesn't "impose" anything. They don't have the authority. They offer their interpretation of the law and do so in a light that is most favorable to them. Just because they say it doesn't make it so.

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Well, this is a very important question -- when using Schedule C is acceptable and when it is not. Ed, you commented that "if you treat poker as a business" Schedule C might be an option. My impression prior to your comment was that poker had to actually be your primary source of income to utilize Schedule C. Any chance you guys could delve further into where the line is drawn?

For those of us that approach poker as "a great part-time job" -- e.g. a business but not our primary enterprise -- I take it we might be out of luck on Schedule C.

Knowing what little I do about this, some considerations about whether a particular player approaches poker as a business or not:

- Does the player log long hours on weekends and weekdays playing? If the player plays only on weekends, that would hurt his/her ability to make the case, but perhaps not be fatal.

-If a player could show that they've dedicated 20 hours or more per week over a sustained period of time, I believe this would be a step in the direction of business and away from entertainment.

-The very fact that those of us who use PT (and have therefore PAID for PT) to collect careful records means we are taking a serious, profit-driven approach to the game rather than just flinging some chips around over beers with our pals.

- Has a player invested in improving his ability to win more money? Buying books/videos, or attending training sessions would bolster this argument, and in doing so further solidify the business argument.

- Does the player travel and incur other expenses in order to conduct his/her poker business? If you want to argue that playing live is important to 1.) your bottom line, and 2.) your continued improvement to win money while playing poker as a "business," you should save all receipts from trips to B&M casinos for parking, food, gas, room, etc. This will surely help show that you're treating the game as a business.

Hell, I could go on but there's really a lot of material to cover here.

The thing I keep going over and over in my mind that I just flat out don't get is why the US tax law makes almost every American that walks into a casino a tax evader. I have to say that there's just no way 95% of people who sit down and gamble a few hundred on their Vegas trip with friends know the law re: winning sessions. They sure as hell aren't keeping contemporaneous records with the table number, amount won, time and date. They aren't reporting the winning sessions, in part because most Americans lose when they play blackjack or whatever, they figure "hey, I lost money, what the hell do I owe taxes on?" if they think about the tax implications at all. The tax code badly needs a safe harbor for recreational players who have winnings under $5,000 in a year or something along those lines. Maybe $1,000 -- who knows. Point being, the rules should be clear and are not, and capture far more people than could reasonably have ever been intended by Congress.

Re: Ed Miller\'s Tax Article
 

The IRS has their "standards," including a multi-year history of profit, but as mmcd said, they can say what they want, but ultimately they have to convince a tax court that they are right.

Basically, I would say that if you see poker as a "business" for you.. i.e., you study and play with the intention of sustained long-term profit.. then you should be eligible to file a Schedule C. That's the qualification. Having many postings on 2+2 should support your claim if it should come to that.

EDIT: I wanted it to be crystal clear that I am neither a CPA nor an attorney, and any opinions I express are my own and not intended to be legal advice.

Re: Ed Miller\'s Tax Article
 

[ QUOTE ]
The IRS has their "standards," including a multi-year history of profit, but as mmcd said, they can say what they want, but ultimately they have to convince a tax court that they are right.

Basically, I would say that if you see poker as a "business" for you.. i.e., you study and play with the intention of sustained long-term profit.. then you should be eligible to file a Schedule C. That's the qualification. Having many postings on 2+2 should support your claim if it should come to that.

EDIT: I wanted it to be crystal clear that I am neither a CPA nor an attorney, and any opinions I express are my own and not intended to be legal advice.

[/ QUOTE ]

I also just like to note that there is a difference between what the IRS says their "standards" are and what they are willing to litigate. Especially in cases that don't have very large amounts of money at issue.