Frozen Neteller funds *ARE* taxable

[sports_quant99]

I keep seeing misinformation on this board, and wanted to clarify for folks. If you won money in 2006, and your funds are now frozen in Neteller, that money is taxable on your 2006 return. Under the constructive receipt doctrine, as long as you could have cashed out in 2006, it is taxable.

Has nothing to do with whether you cashed out or not.

You might be able to claim a theft or bad debt loss on your 2007 or 2008 return, which may or may not get back most/all of the extra tax you pay on the 2006 return.

[DING-DONG YO]

pretty sure this is incorrect.

[sports_quant99]

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pretty sure this is incorrect.

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Sorry....it's pretty close to black and white. The only exception might be if you made a cash-out request in 2006 from the Poker Site and they turned you down.

Now, as a practical matter, even if the IRS gets all the Neteller records, how will they know about your Poker site balances in 2006? They might not need to know, given that Poker sites allow cash out via check. Which then allows the IRS to argue that the Neteller "freeze" is a theft, but that you still owe tax in 2006.

[Our House]

[ QUOTE ]
Under the constructive receipt doctrine, as long as you could have cashed out in 2006, it is taxable.

Has nothing to do with whether you cashed out or not.

[/ QUOTE ]
I could have cashed out the $400 stack I just won off some donk, but I lost it the next hand.

According to your statement, I may now owe the IRS 3.5 Trillionish dollars.

[sports_quant99]

[ QUOTE ]
[ QUOTE ]
Under the constructive receipt doctrine, as long as you could have cashed out in 2006, it is taxable.

Has nothing to do with whether you cashed out or not.

[/ QUOTE ]
I could have cashed out the $400 stack I just won off some donk, but I lost it the next hand.

According to your statement, I may now owe the IRS 3.5 Trillionish dollars.

[/ QUOTE ]

Nope. It was in the same session, so you can "net" it out to zero.

[Our House]

Example 2 (In case you just said what I thought you were going to say):

I wanted to move $5000 from Full Tilt to Stars, so I moved it from FT to Neteller...and then to Stars. I could have cashed it out when it hit Neteller, but I didn't.

Is that taxable too?

[nineinchal]

I would have liked your post a lot better if it was

"Frozen neteller funds are now available"

[Our House]

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I would have liked your post a lot better if it didn't have logical flaws

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[sports_quant99]

[ QUOTE ]
Example 2 (In case you just said what I thought you were going to say):

I wanted to move $5000 from Full Tilt to Stars, so I moved it from FT to Neteller...and then to Stars. I could have cashed it out when it hit Neteller, but I didn't.

Is that taxable too?

[/ QUOTE ]

Yes....has nothing to do with moving money around and/or cashing it out. It's taxable when you've finished a winning session (and assuming that the Poker site is solvent and would pay you upon request).

[DING-DONG YO]

OP, you are not forced to pay income that you never realize. If you cannot access the funds, then you never realized the income.

I'm too busy to look up the exact guidance on this right now, but you're not correct.

I've been doing this for 10 years, trust me.