THE GO SCHNEIDS THREAD (was about bk, but he busto-ed)

[DcifrThs]

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Mike pays taxes, then he just cuts up precentages. people expecting to get money pre-tax are idiots.

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sorry kane, i gotta call you the idiot here.

party cruise doesn't do paperwok and they cut mike a check

he didn't win all of the 1mil so he cuts checks to his backers from the 1mil (it makes no sense to tax the backers-who invested in something- at the tax rate of the winner...i.e. if X is in the 25% bracket and has 1% of mike, why tax him at the 35% bracket)

so he fills out paper work and keeps records of the checks he cuts to his backers.

he then pays taxes on his winnings

there is no other way to distribute a tournament win to backers without:

1) double taxing
2) having each backer pay his/her appropriate tax rate

Barron

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the fact that it was being debated led me to believe that it was being reported to irs.

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that does bring up an interesting point though kane.

lets say for example the check cut to mike was at a tax rate of 35%, so the money he gets is 650k.

i dont know the tax code, but lets say its like 20% for 30k, 30% for 40k, and 35% above 50k or whatever.

now lets say one of his backers has an annual AGI of 30k and he bought 1% of mike. he now gets 10k but it was taxed at 35% so its now 6.5k for a total AGI of 36.5k, which is at the 20% tax rate. so he SHOULD have gotten 10k bumping him up to eht 30% bracket for 7k net instead of 6.5k net. so how does the backer get the 500 he is owed by the IRS? im assuming there is annoying paperwork?? how do you prove this relationship is what happened...

im assuming there are many people on this board who know the answer so if it doesn't come up here, i'll make a new thread about it b/c im curious to see how different marginal tax rates deal w/ the immediate witholding of a tourney win.

Barron