Taxes and quitting while you're even.

[Guthrie]

There have been some posts by recreational players who want to properly file and pay their income taxes, but have found that their particular tax circumstances, for example, taking the standard deduction, result in a bad beat when it comes to taxes.

Some of the tax professionals here can correct me if I'm wrong, but I think it's safe to say that for many people not filing as a professional gambler, a dollar in losses may not completely offset a dollar in winnings.

Let's say you have a full-time job and you are a winning poker player who plays for fun and a few extra bucks, so you can't file as a professional, but you want to properly file and pay your taxes, which means you declare your winnings as income, deduct your losses as ordinary deductions, and end up paying more taxes than you would if you were allowed to net your winnings.

You play X hours every night, and assume that the IRS will accept that as one session.

You accept that poker is really one life-long session, and quitting while you are ahead or behind each day makes no difference in the long run, so you quit when you hit your hours, your hands, the baby needs changing, or the wife needs servicing.

If you are down $100 at the end of your session, then you have to take that loss as a standard deduction, which may not completely offset a $100 win the next day.

Due to tax implications however, if you continue playing while you are down, every dollar in net winnings until you end the session is worth more than a dollar, so keep playing until you are even, or close, or have a small profit for the session.

The government's odd tax treatment of gambling has given you an overlay any time you are in a losing session.

By continuing to play when you are down, you are netting your wins against your losses legally, in the same session, before you report them. Sometimes, of course, you will just keep losing, but that's poker, and taxes. Overall the effort should be +EV.

You play the same number of hands per year, at the same BB/100, but you make an effort to even out the distribution of wins and losses to your advantage.

That's my theory. Flame away.