[Jimbo]

[ QUOTE ]
The biggest issues I see are satellites and rebuy tournaments. In rebuy tournaments, the buy in amount is unknown for each individual player - so how is the net win for that tournament to be figured?

[/ QUOTE ]

Taxes are witheld from the gross win, not the net so it is irrelevant insofar as the tax witholding is concerned. As to figuring your year-end net I always get a receipt for my rebuys.

[ QUOTE ]
For satellites, I think a reasonable argument could be made that a satellite win and the tournament for which entry is won are a single event. However, when sats are paid out with tournament entry chips that can be sold, you are actually receiving a negotiable instrument for the amount of the entry fee. If casinos were to instead register the player for the main event directly (obviously not possible online - lets stick with B&M here) and that registration was non-transferable, a solid argument could be made for no withholding on that amount based on constructive receipt. The sat winner never actually received his winnings in this case.

[/ QUOTE ]

I disagree and am confident the IRS will as well. Suppose you win the sat and don't bother to show up to play in the tournament? Under your theory there would be no taxable income, do you really think the IRS would agree? Now a pro would not care one way or another since the net effect would be tax neutral but a "hobbyist" could have potential tax liability.

Jimbo