[sawseech]

You are correct to believe that existing U.S. tax code is unfair to online poker professionals (hereafter OPPs).

The current treatment of OPPs by IRS/DOJ is to net session-by-session results over an annual basis, but to disallow the carryover of losses to future years. That is to say, OPPs are treated like someone selling lemonade out of their garage and not like the small businesses that they are. The net annualized result is recognized on a revenue basis, and not cash; that is to say, what you won is your net, not what you cashed out.

The IRS implicitly recognizes that the present taxcode is unfair to OPPs, because OPPs constitute the exception to the rule in that they are big winners, but often lack subsidiary/substitute income to which their present years losses (if incurred) could be applied to offset and make the taxation fair in comparison to other citizens. Hence, IRS/DOJ have generally adopted a policy of limited-leniency with regards to reporting on a mostly cash basis, because they have no desire to break someone paying several hundred thousands of mostly untracable dollars of taxes on income which they could not easily follow if left to their own devices.