Re: BarryG - Online Poker should be legal in 6 months
 

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I talked to my accountant about this sometime back.

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You need a new accountant. This is not only wrong, it is is ridiculous.

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There aren't very many people in this world I trust very much, but this guy has saved me thousands. Without specifics, your post is ridiculous. Make a reasonable argument.

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Just a quick skim of your OP: income is MOST CERTAINLY counted before it is cashed out. I asked a tax attorney about that possible angle like 4 years ago. I got pretty much the answer I expected. (That is, it is counted if you are obeying the law and not counting on lack of traceability to protect you, but then you are just evading and hoping you don't get caught).

The other stuff about it being effectively like any other business looks ok.

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That makes some sense, I guess. Given the day-to-day flux in bankroll size, however, what number would be taxed? Would it be wins vs. losses for a session? Would be total bankroll as of xx/xx/2008 minus total bankroll as of xx/xx/2007 minus any deposits plus any cashouts? Would they try to account for it bet by bet? It just seemed to me that Cashouts - deposits was the simple and easy way to handle it, much like stock transactions.

How is income calculated in your scenario, fnord?

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It's not his scenario; it's the IRS'

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

Read part 3 here. This was written by an accountant that is educated in tax law as it applies to gamblers. If you still have doubt, then you can weed through the IRS' website and find the relevant information, but I'm not going to search that site for you.

Re: BarryG - Online Poker should be legal in 6 months
 

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Ask yourself this: why should a professional poker player be treated any different tax-wise than any other professional?

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I agree that poker income should be treated equally, but the US tax system is fraught with examples of inequality based on arbitrary rules. Think about renters versus homeowners or married versus single for examples.

And look no further than taxes on tobacco and alcohol for why poker may get taxed differently.

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Thats why I made the distinction between sites and players. I would expect them to tax sites in some way - but that is the cost of doing business, just like pretty much every business is taxed.

What I am saying is that there is not going to be any NEW tax on a PLAYER'S poker winnings. They will be treated just the same as they are now.

Would they tax the sites so high that they have to charge a rake no one would pay? Then they get no tax money, and all of us continue to play at offshore sites that also give the US no tax money.

If we get legality, we are going to get some form of regulation, true, and that will include some form of tax revenue for the Feds that may affect the rake slightly. But stop the "doom and gloom" tax predictions (not you personally), they are just not realistic.

Skallagrim

Re: BarryG - Online Poker should be legal in 6 months
 

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Temp made one. I'll make another...

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Money placed in an online site is sort of like money placed in stocks; at the end of the year, you count what you cashed out as income, what you put in as investments, and pay tax at standard rates on the difference. Rake could well be deductible as a business expense. It may even be handled as capital gains rather than straight income.

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No offense to your accountant, but if he really operates this way he is insane and you do need a new accountant.

By using his logic, I could buy a hooker and tell the government that it was sorta like a stock investment. On the off chance I would knock her up I could later use the benefits of having a child for tax savings. Well, technically, I would be renting the hooker which would open up even more possibilities re. to whether I could capitalize the payment.

The IRS doesn't go for words like 'sorta'. Depositing on a web site is not like investing in stocks and rake has nothing to do with business expenses. And certainly cannot be handled as a capital gains.

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Let me say here that I am not in the business of financial counseling, and some of what I wrote was conjecture. However, I think poker is a lot more like stock transactions than you think.

Poker sites are much like brokerage houses in that they mediate transactions between individuals. The sites take a percentage of these transactions as rake, same as a brokerage house does. Options trading in particular is very much like what we do on a poker site. Now, if brokerage transaction fees can be deducted as business expenses, and I'm not sure they can be, but if they can, it stands to reason that the rake at a poker site is the very same thing.

The real point I was trying to make is that the problem of taxation of poker profits can be minimized by good tax accounting, and that the upside of legitimacy more than pays for these expenses. Once more money comes into the system, power to control how these issue will be handled will follow.

Re: BarryG - Online Poker should be legal in 6 months
 

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I talked to my accountant about this sometime back.

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You need a new accountant. This is not only wrong, it is is ridiculous.

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There aren't very many people in this world I trust very much, but this guy has saved me thousands. Without specifics, your post is ridiculous. Make a reasonable argument.

[/ QUOTE ]

Just a quick skim of your OP: income is MOST CERTAINLY counted before it is cashed out. I asked a tax attorney about that possible angle like 4 years ago. I got pretty much the answer I expected. (That is, it is counted if you are obeying the law and not counting on lack of traceability to protect you, but then you are just evading and hoping you don't get caught).

The other stuff about it being effectively like any other business looks ok.

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That makes some sense, I guess. Given the day-to-day flux in bankroll size, however, what number would be taxed? Would it be wins vs. losses for a session? Would be total bankroll as of xx/xx/2008 minus total bankroll as of xx/xx/2007 minus any deposits plus any cashouts? Would they try to account for it bet by bet? It just seemed to me that Cashouts - deposits was the simple and easy way to handle it, much like stock transactions.

How is income calculated in your scenario, fnord?

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Yearly net after expenses. So, pretty much like your middle equation: BR 12/31 - BR 1/1 -Deposits + withdraws - other expenses (+ any other income like rakeback sent directly to you).

If you are not filing as a pro, I would just let my accountant tell me what information and records he needs and follow his advice (and if you are filing as a pro I would do the same [img]/images/graemlins/smile.gif[/img] ). (I am not an accountant, but I am comfortable because my accountant does all this that even if it is all wrong I am not committing tax evasion. The worst that could happen is I get hit with a bill and some interest on top of it. I figure the $350 I pay him every year to do my tax return is basically insurance against the IRS ever coming after me. I report everything anyway, so I think that risk is pretty low to begin with, but I have zero desire to deal with the IRS in any way if I can avoid it.)

Re: BarryG - Online Poker should be legal in 6 months
 

"lol you guys can have party. i'll take bellagio.com."

LOLOLOLOL TO THAT.

Re: BarryG - Online Poker should be legal in 6 months
 

By the way, a real good discussion of the current tax situation for poker players is going on here . . .

http://forumserver.twoplustwo.com/showfl...=0#Post12704067

Re: BarryG - Online Poker should be legal in 6 months
 

The only problem with setting up a "Antiqua Napster" is that WTO has not ruled on Antiqua's request for the sanction of ignoring US IP laws. We should know by Nov. 30, but I think the odds of it happening are only 50%.
If it does, then some firm in Antiqua can become a "Napster" at least until US complies with WTO ruling. I think that compliance would be fairly quick.
But if WTO wimps out and does not grant IP sanction to Antiqua, then online poker is left with litigation as the only likely remedy to obtain certain legal status. I think that Barry G's time estimate is based on positive WTO action. I hope he is right.