Frozen Neteller funds *ARE* taxable

[DING-DONG YO]

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In the IRS's eyes (with respect to Neteller), you did hold the money briefly, right after your online session ended. This is not because you actually physically possessed it, but it's because you "could have" cashed out from the Poker site immediately.

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100% correct. It's comical to watch all the poker tax cheats try to justify their criminal activities [img]/images/graemlins/laugh.gif[/img]

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where do you people come from?

[sports_quant99]

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is not constructively received if the taxpayer's control of its receipt is subject to substantial limitations or restrictions.” IRS Regulation 1.451-2(a)

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But income ***WASNT*** "subject to substantial limitations or restrictions" at the time the session ended. Therefore, constructive receipt occurred.

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The IRS guidance does not specify when "substantial limitations or restrictions" on the funds have to occur. I would interpret that to mean that if you have "substantial limitations or restrictions" on the funds at any time preventing you from accessing them, that they are not constructively recieved and I would advise any client to this effect and go up in front of any judge and argue this.

The IRS will not say "well, you could have gotten the cash before the DOJ shut down neteller, but you didn't so your bad, pay us the taxes even though you never actually got the funds". It doesn't work like that and anyone who has sat for one day in a tax class would know the general theory behind income reporting and your interpretation of contstructive receipt violates that general theory.

I have made my case and proven my point, I will not argue for the sake of arguing. You are not correct and please stop spreading misinformaion on these boards.

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I am scared for your clients to be honest. People **DID** get the cash before the DOJ shut down Neteller. They just chose to transfer it to Neteller, as opposed to getting a check from the Poker site.

Put this analogy in front of your law school class:
I work for IBM, and get my paycheck deposited. The bank fails, and the FDIC does not reimburse me. At the end of the year, you *DO* owe tax on those W2 wages from IBM.

Please stop spreading misinformation on these boards. Your advice is patently false.

[DING-DONG YO]

ok, bud.

I have stated my qualifications and provided a link to the IRS guidance which you are misinterpreting.

Who are you and what qualifies you to give this advice?

oh and:

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I work for IBM, and get my paycheck deposited. The bank fails, and the FDIC does not reimburse me. At the end of the year, you *DO* owe tax on those W2 wages from IBM.

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el oh el

[sports_quant99]

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is not constructively received if the taxpayer's control of its receipt is subject to substantial limitations or restrictions.” IRS Regulation 1.451-2(a)

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But income ***WASNT*** "subject to substantial limitations or restrictions" at the time the session ended. Therefore, constructive receipt occurred.

[/ QUOTE ]

The IRS guidance does not specify when "substantial limitations or restrictions" on the funds have to occur. I would interpret that to mean that if you have "substantial limitations or restrictions" on the funds at any time preventing you from accessing them, that they are not constructively recieved and I would advise any client to this effect and go up in front of any judge and argue this.

The IRS will not say "well, you could have gotten the cash before the DOJ shut down neteller, but you didn't so your bad, pay us the taxes even though you never actually got the funds". It doesn't work like that and anyone who has sat for one day in a tax class would know the general theory behind income reporting and your interpretation of contstructive receipt violates that general theory.

I have made my case and proven my point, I will not argue for the sake of arguing. You are not correct and please stop spreading misinformaion on these boards.

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Hmmmmm.... you also conveniently ignore the plain language of the IRS regs:
"...could have drawn upon it during the taxable year if notice of intention to withdraw had been given."

The poker player **COULD HAVE** drawn upon it when the session ended. The fact that he didnt doesnt matter to the IRS. The fact that he chose to transfer funds from the poker site to Neteller also reinforces to the IRS that he could have instead received a check from the Poker site, or at the very least, cashed out of Neteller immediately (Neteller was still cashing people out as of 12/31/06 with no delays).

Again, the words ***COULD HAVE***

[DING-DONG YO]

and you continue to ignore the part of the guidance I bolded. What are you? A law student that talked about this for an hour in class today? Now you're an expert?

bye bye trolly mctrollerson, no mo trolling by you.

[sports_quant99]

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In the IRS's eyes (with respect to Neteller), you did hold the money briefly, right after your online session ended. This is not because you actually physically possessed it, but it's because you "could have" cashed out from the Poker site immediately.

[/ QUOTE ]

100% correct. It's comical to watch all the poker tax cheats try to justify their criminal activities [img]/images/graemlins/laugh.gif[/img]

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THANK YOU! Finally a voice of reason. The IRS regs are crystal clear:
"...could have drawn upon it during the taxable year if notice of intention to withdraw had been given."

The poker player **COULD HAVE** drawn upon it when the session ended. The fact that he didnt doesnt matter to the IRS. The fact that he chose to transfer funds from the poker site to Neteller also reinforces to the IRS that he could have instead received a check from the Poker site, or at the very least, cashed out of Neteller immediately (Neteller was still cashing people out as of 12/31/06 with no delays).

"Could have" is plain English. Heck, why are people even bringing up arguments about a law school 101 class. How about remedial English?

[sports_quant99]

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and you continue to ignore the part of the guidance I bolded. What are you? A law student that talked about this for an hour in class today? Now you're an expert?

bye bye trolly mctrollerson, no mo trolling by you.

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IRS reg: "...could have drawn upon it during the taxable year if notice of intention to withdraw had been given."

The poker player **COULD HAVE** drawn upon it when the session ended. The fact that he didnt doesnt matter to the IRS. The fact that he chose to transfer funds from the poker site to Neteller also reinforces to the IRS that he could have instead received a check from the Poker site, or at the very least, cashed out of Neteller immediately (Neteller was still cashing people out as of 12/31/06 with no delays).

[DING-DONG YO]

way to yet again ignore the qualifying sentence at the end of the reg.

[sports_quant99]

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way to yet again ignore the qualifying sentence at the end of the reg.

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Nope. Not at all. When the session ends (and assuming the player can legitimately cash out right then and there) constructive receipt is now in effect. Taxable event. Constructive receipt cant then "go away" (unless the check bounces).

Go back to law school.

[phish]

OP is 100% correct here unfortunately.

As far as the IRS is concerned, you owed taxes on what you earned in 2006, 'earned' as defined by their rules of gross session winnings, with deductions for losing sessions.

What happened to your money in 2007 is of no concern to them.

You ought to be able to claim for the 2007 return a casualty/theft loss. But it has no bearing on your 2006 return.