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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.