Should poker players set up an "S-CAP" and/or "LLC" for tax purposes?

[marathoner1977]

I just had my taxes done and filed as a Pro Gambler for the first time in 06. I filed "self-employed" and will be paying quarterly in 07. My income was under 100K, however, this year it will be at least 3-4 times that #. The CPA I was working with started telling me of options to set up an "S-CAP" with the option of first establishing an "LLC" and transfering it to an "s-cap". Honestly, I was too tired that night to take in all of the specifics as he explained this process to me, so I am hoping some of you will help me out? Is this being done by other pro's? Risks vs. Rewards??

[hugefish1]

You mean "S-Corp"...Not "S-Cap"

S-Cap is when you put in that fifth raise and and say "I'll S-Cap it"

It would be a "professional S-Corp", like Doctors set up

[JPFisher55]

I am an attorney that practices in small business law. LLC's with one owner are taxed just like a sole propietor. An S corp with one owner will cause you to file an extra return without any change in the taxes that you pay.
An LLC with two owners might make you eligible for some retirement plans if you were really a professional player who travels to play poker.
I don't think that you need the limited liability protection offered by a LLC or S corp. unless you have actual employees.

[Poker CPA]

This is a question for your CPA, not this forum. ASk him, then post his reasons. Some reasons could be 1. state taxes, 2. retirement plans, 3. martial status, 4. audit proofing a return, 5. foriegn bank relationships and other such "fancy plays". Generally its a waste of time and money for professionals with no real liabilities. Fine for doctors, lawyers & Indian Chiefs. But you?????? Best quess - RETIREMENT PLAN or problems with signnificant other. Professional ballplayers and coaches have been taken to the cleaners by the IRS, over these types of tax deals. First hand knowledge on that.

Simple partnerships get the least attention from the IRS.