This should end all of the false claims about paying US taxes on poker

[Mathemagician]

[ QUOTE ]
3. Are comps taxable? Thank you, Broiler, for posting the link to Libutti v. Commissioner. As the Court noted in the case, it's gains from gambling that are taxable, not winnings. If you go to a casino, and they give you a comped lunch which you eat, there's no gain. If you sell the comp (and the casino allows that) to John Doe for $20, you've made $20 in taxable income.

If a casino gives you a Rolls Royce as an enticement to gamble, that's a pretty big gain.

[/ QUOTE ]What if you eat it?

M

[cardcounter0]

[ QUOTE ]
[ QUOTE ]


3. Are comps taxable? Thank you, Broiler, for posting the link to Libutti v. Commissioner. As the Court noted in the case, it's gains from gambling that are taxable, not winnings. If you go to a casino, and they give you a comped lunch which you eat, there's no gain. If you sell the comp (and the casino allows that) to John Doe for $20, you've made $20 in taxable income.

If a casino gives you a Rolls Royce as an enticement to gamble, that's a pretty big gain.




[/ QUOTE ]


Russ,

Im pretty sure that the comp is still taxable but not as gambling income.

[/ QUOTE ]

Im pretty sure that you didn't read Libutti v. Commissioner.

[NickMPK]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]


3. Are comps taxable? Thank you, Broiler, for posting the link to Libutti v. Commissioner. As the Court noted in the case, it's gains from gambling that are taxable, not winnings. If you go to a casino, and they give you a comped lunch which you eat, there's no gain. If you sell the comp (and the casino allows that) to John Doe for $20, you've made $20 in taxable income.

If a casino gives you a Rolls Royce as an enticement to gamble, that's a pretty big gain.




[/ QUOTE ]


Russ,

Im pretty sure that the comp is still taxable but not as gambling income.

[/ QUOTE ]

Im pretty sure that you didn't read Libutti v. Commissioner.

[/ QUOTE ]

Libutti (from skimming the link) holds that the comps were gambling income. The issue was not whether they were income, but whether they were gambling winnings or some other type of income. Libutti won the case, which allowed him to deduct his gambling losses and effectively not have to pay taxes on the comps.

But the reason you don't have to pay tax on a comped lunch has nothing to do with this case. A comped lunch is de minimus; it is too small for the tax code to be concerned with. The comps in Libutti were worth thousands of dollars, far different from the comps the average recreational gambler gets.

[kutuz_off]

[ QUOTE ]
I used to get RFB + Airfare to Las Vegas comped to me. If the casino made the air ticket arrangements, it is a comp and not taxable. If I bought the plane ticket and the casino hands me cash to reimburse me for the airfare, it is taxable.

[/ QUOTE ]

In the latter case, couldn't you deduct the price of plane ticket as gambling-related expense anyway? I mean, it adds to your gross income and deductions, which may or may not have consequences, but it still nets to essentially zero, right?

More general questions - I logged about 1500 hours playing online poker in year 2006. Am I eligible to file as a professional? Also, my online poker records show a healthy net profit, while offline poker records show a lot of large negative sessions. Obviously, online sessions are easier to trace than offline ones. Would that make IRS suspicious? My offline records only show date and name of the Casino and the game played. In a few cases, I have tournament entry receipts, but for cash games I got no proof.

Another question - I won a qualifier in 2006 to a live tournament in 2007. I don't think the value of the seat is taxable in 2006, since it has no cash value, can't be transferred or sold, etc. I cashed in the tournament, and I believe I now owe taxes on the full value of the gross prize less transportation expenses, but it's for year 2007. Is that correct?

[EMc]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]


3. Are comps taxable? Thank you, Broiler, for posting the link to Libutti v. Commissioner. As the Court noted in the case, it's gains from gambling that are taxable, not winnings. If you go to a casino, and they give you a comped lunch which you eat, there's no gain. If you sell the comp (and the casino allows that) to John Doe for $20, you've made $20 in taxable income.

If a casino gives you a Rolls Royce as an enticement to gamble, that's a pretty big gain.




[/ QUOTE ]


Russ,

Im pretty sure that the comp is still taxable but not as gambling income.

[/ QUOTE ]

Im pretty sure that you didn't read Libutti v. Commissioner.

[/ QUOTE ]

Im pretty sure I did a report on it, and was confirming that while not gambling income the comps were still income.

[cardcounter0]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]


3. Are comps taxable? Thank you, Broiler, for posting the link to Libutti v. Commissioner. As the Court noted in the case, it's gains from gambling that are taxable, not winnings. If you go to a casino, and they give you a comped lunch which you eat, there's no gain. If you sell the comp (and the casino allows that) to John Doe for $20, you've made $20 in taxable income.

If a casino gives you a Rolls Royce as an enticement to gamble, that's a pretty big gain.




[/ QUOTE ]


Russ,

Im pretty sure that the comp is still taxable but not as gambling income.

[/ QUOTE ]

Im pretty sure that you didn't read Libutti v. Commissioner.

[/ QUOTE ]

Im pretty sure I did a report on it, and was confirming that while not gambling income the comps were still income.

[/ QUOTE ]

Im pretty sure you didn't do too well on the report, because that was exactly what the court found, the comps were gambling gains that could be offset by gambling loss deductions. If the comps were some other type of income, they could not have been offset by gambling losses.

[cardcounter0]

[ QUOTE ]
In the latter case, couldn't you deduct the price of plane ticket as gambling-related expense anyway? I mean, it adds to your gross income and deductions, which may or may not have consequences, but it still nets to essentially zero, right?

[/ QUOTE ]
If you file as a pro, yes the cost of the trip is a business expense.

[ QUOTE ]
More general questions - I logged about 1500 hours playing online poker in year 2006. Am I eligible to file as a professional?

[/ QUOTE ]
There is a list of about 10 factors used to determine if you are a pro. Consult a tax pro or maybe Russ can write an article showing what the IRS uses to determine this.

[ QUOTE ]
Also, my online poker records show a healthy net profit, while offline poker records show a lot of large negative sessions. Obviously, online sessions are easier to trace than offline ones. Would that make IRS suspicious? My offline records only show date and name of the Casino and the game played. In a few cases, I have tournament entry receipts, but for cash games I got no proof.

[/ QUOTE ]
Do you have a player's card? How about dropping by the gift shop and picking up a key chain. Keep the reciept. It shows you were at the casino when your log says you were. This will boost your log along with tourney entry receipts.

[ QUOTE ]
Another question - I won a qualifier in 2006 to a live tournament in 2007. I don't think the value of the seat is taxable in 2006, since it has no cash value, can't be transferred or sold, etc. I cashed in the tournament, and I believe I now owe taxes on the full value of the gross prize less transportation expenses, but it's for year 2007. Is that correct?

[/ QUOTE ]
Depends. Are you sure the seat had no cash value? Could people enter the tourney in 2007 directly with cash? Then what you won in 2006 had a value, since you did play in the tourney. Also what you won in 2007 is minus the value of the entry -- if what you won in 2006 had value.

[Lottery Larry]

talk about laughable:

"Also, most of the "definitive" interpretations of a session are laughable since the wording was clearly constructed in relation to B&M games"

hmmm, I wonder why that was......?

"make a list of the countless thousands who were audited after making a good faith claim on internet poker winnings"

Are you trying to say that we "paranoid" posters are claiming that less-than-complete records will TRIGGER an IRS audit?

I can look around my neighborhood and see lots of crack dealers. Just because I don't see most of them not getting busted doesn't mean:

a) They won't get busted, with potentially serious consequences (you can define "serious" in our audit context)

b) They aren't doing something illegal.


The problem that I and evidently others have is non-professionals telling people that they can just smooth things over with a "but I tried my best, since I didn't keep records in the first place" defense.

We are not saying that you're going to jail for 20 years and paying $1M in fines for bad records. But people telling others that they don't need to keep reasonable records because they don't run a big risk of getting caught is foolish and objectionable.

I can tell you that there's big money in being a crack dealer and you're unlikely to get caught if you don't get too big or are careful. That still makes you a crack dealer and you're still at risk.

[Lottery Larry]

Boy, was the title of THIS post way off base....

[Lottery Larry]

[ QUOTE ]
I just want to thank Russ personally for writing this part. I have no idea how this myth got created, and I've been trying to correct people every time I see it

"Myth #12. The IRS can’t share information from my tax return with other government agencies because of the “Silver Platter” doctrine. Another falsehood. As noted above, the IRS routinely shares information with state tax agencies. In Garner v. United States (424 U.S. 648 (1976)) the Court held that the occupation listed on a tax return can be shared. If you are foolish enough to list your occupation on your tax return as “illegal drug dealer,” the IRS can forward your name to other law enforcement agencies."

[/ QUOTE ]

Mine also- I had the same impression about the silver platter concept. I thought that was the IRS' slick plan to get more money reported, without someone having to admit to being a criminal.

If the gubbermint ever gets around to making playing poker online illegal, rather than just trying to cut off the revenue stream..... it's going to be a tough sell of the "report your illegal income" message.