Re: Incorporating yourself as a Professional Gambler:
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Krishan,
Great information, much appreciated.
The counter-argument would be that I work as more like an investor and trader. I am supplying capital to make trades as well as executing them. It’s standard in this industry for backers/stakers/investors to put up all the capital for professional players to play in exchange for 66% of the total profits (and eating all the losses if they do incur). So it would make sense for me to be only paid, "25-33%" of my winnings. This is quite different from a professional athlete who is merely paid a salary and can’t lose money.
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Heh. I thought those thought but from another line. I wanted to shelter the bankroll portion of my winnings. Because it's capital tied up in the business, and without it I wouldn't have a business, wouldn't it make sense for me to only pay taxes on winnings excluding a reasonable bankroll? Unfortunately, the IRS doesn't look at it this way. And it's the IRS that makes the rules.
I must point out that in the situation you describe, the backer would presumably pay taxes on the 66% of winnings. Since you are essentially your own backer wouldn't you still be responsible for the whole thing?
Krishan
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