Rough draft #2 to IRS (self employment tax issue)

[Emperor]

I'm not sure what the crossover point is for self Employment tax, but last I checked it was more than I made.

It worked like this:

Lime 437961: amount of self employed income
Line 437962: $50,000 - Line 437961
Line 437963: if line 437962 is greater than 0, then you owe that amount x 15% (or some such number), if less than 0 then you owe nothing...

In other words you had to cross some threshhold before paying Self Employment tax. Of course maybe it was much less, tl;dr :P

[scratchy1]

I got the same letter and my CPA sent an appeal letter basically just listing the conditions to be a professional gambler and refuting each one. The IRS accepted the appeal so there is hope. Good luck.

[pokerkai]

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In 2004 I did not gamble with the intention for profit

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Up here in Canada, intention for profit is not a criteria for establishing professional play. There was a court case in 2002 where the judge threw that out as a criteria because he believed that all who gamble play with the intention of profiting...whether the ability to do so is there or not.

[I_C_ALL]

A few thoughts.....

Considering the standard deduction and that as a "professional" you can still write off your losses directly against your winnings plus write off all your expenses for travel/meal(50%)/board/computer/etc... and still claim the standard deduction. You may want to do an apples to apples comparison. Either you'll receive the standard deduction and have to pay self employment taxes or you'll itemize as a "non-professional" and lose the standard deduction(unless you already itemize then obviously this wouldn't be a consideration)

Other thing to think about is if you will be playing professionally in reality. I'm not sure at what point AMT comes into play or if that is an issue, but if your top line says income of 1mil and your itemized losses are $900,000 you may have an AMT issue.(not sure).

As a professional, you can incorporate, set up a sep ira and put 25% up to I think its 42k this year. Just things to think about.

You've been classified as something most would have to prove. You may NOT want to fight this. Just worth looking at from both sides

Lastly, your last line says you are not eligible for the self employment tax. I usually think in terms of liability(I am not liable for the self employment tax), but you may have written it to sound nicer.(Not liable implies they're wrong, Not eligible implies your missing out on something...at least in my mind) Just wanted to make sure that was your intention and not a mistype.

[donger]

[ QUOTE ]
Hi George, I'm a CPA and manage the tax practice of a public accounting firm. I think you did fine with your letter, however, I'd change the 4th paragraph to be much less specific. Try this:

"In 2004, I was a full-time student at USC and only played poker as a hobby. I frequented the cardrooms of LA and made occaisional trips to Las Vegas whenever my studies allowed. My poker playing was for recreational purposes only and the fact that I made a profit does not change that".

You don't need to go into so much detail about your gambling activities. The IRS does not need to know how live or spend your money. Be general about your personal info. As long as you reported your winnings as Misc income, and your losses on Sched A, you should be fine.

Also, instead of "Gentlement" as the salutation, use "Dear Sir or Madam." It's more PC, but not a big deal.

If you have any more questions, PM me. I don't post much, but I lurk daily. Good luck.

[/ QUOTE ]

Also if you keep this paragraph, drop the word "frequented" since you're arguing the infrequency of your gambling trips. Try like "I made occasional trips to the cardrooms[...] studies allowed"

[bcblack]

would you mind saying roughly how much poker income you claimed? I may be in a similar spot this year and just curious.

[lala]

it seems some of you think the case is not decided yet, geormiet already disputed the case and won.

http://forumserver.twoplustwo.com/showfl...rue#Post7610605

[Jeter5583]

so what is the status of this now?

[adanthar]

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so what is the status of this now?

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look up

[justin]

[ QUOTE ]
would you mind saying roughly how much poker income you claimed? I may be in a similar spot this year and just curious.


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