Re: My new CPA says I should file as a corporation???
 

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You can do it, what happens if they decide to audit you is a different matter. Im not aware of a court case where an online pro who used a corporation in an OFC without income taxes has been audited. Im not sure it would fly in a particular state. Esepcially if you have one where gambling as a business is defined as a crime.

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I'm not sure either, but its defintely something that more than a few CPA's are recomending these days. I've talked with two pretty good ones in CA, and both have suggested that I do this, and have said it has worked out well for other clients. I can believe it could get a little tricky if you were audited, although I've been told otherwise.

Looking past this and s-corp seems to be the best way to go. You accountant is right, you dont have to pay self employment tax, and you can write off all your gambling related expenses. One more thing to consider is whether or not you may need to borrow some money at some point down the road for a house or whatever else. If thats the case you are probably better off filing under some vague occupation and paying on your winnings rather than putting professional gambler on that line. Banks arnt crazy about lending money to gamblers.

Re: My new CPA says I should file as a corporation???
 

I've been told by a CPA that poker players, like athletes, cannot incorporate themselves.

Re: My new CPA says I should file as a corporation???
 

Incorporating and filing as a sub S seems highly unorthodox to me (an attorney with basic knowledge of the tax law, but not an expert in it). I would want a signed opinion letter from an attorney, not an accountant, if I were to do it, which based on my current state of knowledge I would not. I'm not saying it's clearly wrong, it's just very unusual, and undoubtedly would not be looked upon kindly by the IRS if anyone noticed.

Over the years, I've heard many stories about CPAs giving wrong, completely illegal advice to clients. The clients and CPAs almost always get away with it because the chances of being audited are so low. But sub S's whose sole purpose is to minimize SE taxes and professional gamblers both seem to be areas of current interest to the IRS.

Re: My new CPA says I should file as a corporation???
 

S Corporation owners who work for the company must (with very limited exceptions) pay themselves a "reasonable" salary. And that means a W-2, with employment taxes withheld. This is a point of emphasis for the IRS in their current enforcement efforts.

As to incorporating (as a professional poker player), can it be done? Yes. Is it the right thing to do? It's possible that it's right, but it's probable that it's not. Everyone's situation is different, and this is something that each individual would need to discuss with his or her professional tax adviser and probably his or her attorney.

-- Russ Fox

Re: My new CPA says I should file as a corporation???
 

Did your cpa mention that if you file as a sub-s corp. and you make a profit you will have to pay yourself a reasonable salary and thus have to pay, you guessed it, payroll taxes. Now you don't have to pay all your profits as a salary, some of it you can take as a tax free distribution. This is where the tax savings lie.

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I've been told by a CPA that poker players, like athletes, cannot incorporate themselves.

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Raymer did this the year he won the WSOP. Not sure about atheletes either. I can see it for team sports because they technically work for the team, but not like skiing, or skateboarders who bascially work for themselves. Maybe I'll research this at work.

Re: My new CPA says I should file as a corporation???
 

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S Corporation owners who work for the company must (with very limited exceptions) pay themselves a "reasonable" salary. And that means a W-2, with employment taxes withheld. This is a point of emphasis for the IRS in their current enforcement efforts.


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QFT

In the tax update seminar I was at last weak we spent over an hour talking about the recent slew of reasonable compensation cases being pursued by the IRS over the last year.

Re: My new CPA says I should file as a corporation???
 

I know more than one poker player that has formed an S-Corp.

Re: My new CPA says I should file as a corporation???
 

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Banks arnt crazy about lending money to gamblers.

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that's not true

Many "big banks" like NationPoint don't care at all. Some "small banks" care..but guys like Wells Fargo don't.

Re: My new CPA says I should file as a corporation???
 

FWIW I know about 4 professional snowboarders that make a lot of money and all file under a subchapter S.

Re: My new CPA says I should file as a corporation???
 

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Banks arnt crazy about lending money to gamblers.

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that's not true

Many "big banks" like NationPoint don't care at all. Some "small banks" care..but guys like Wells Fargo don't.

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I didnt just pull that straight out of my butt, I've dealt with both Citibank and Bank of America, and both had huge issues with my profession. In fact my loan officer at Citibank actually ended up selling me to higher ups as a computer programer and I was finaly able to get a home loan only because I had a decent amount of assests, and that was with a big downpayment. If you have really strong credit and good income then of course its a lot eaiser to ignore, (my credit sucks) but to say that all big banks dont care, especially with all the tightening in lending lately is going on is just so completely false.

If you search this topic and posts by Ray Zee he talks about it quite a bit.

Edited because I read you said "many" big banks, not all. It's entirely possible that what you are saying is true, and some of them dont mind. Just pointing out that it was an issue for me with a couple bigger banks.