#1
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Staking
Sorry if this has been covered guys (still searching the posts for exact answers), so even a linked reference would be fine.
My friend and I have set up a staking deal for a % of my action in WSOP events. My only concern is taxes. Since I have to report all of the income, and thereby claim taxes on it, can I simply claim the money that I send him as a loss? He will be reporting and paying taxes on any of his winnings from the arrangement. Any well-informed advice would be greatly appreciated. |
#2
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Re: Staking
I would think that, as long as your friend will be claiming his % as a win, you will have an opportunity to add a change in value for your win on your taxes themselves.
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#4
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Re: Staking
[ QUOTE ]
I would think that, as long as your friend will be claiming his % as a win, you will have an opportunity to add a change in value for your win on your taxes themselves. [/ QUOTE ] That's what I had hoped to do, but it seems as though the 5754 form should be used for filing in this situation... |
#5
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Re: Staking
According to Russ Fox, the Rio will no longer accept 5754 forms and you'll have to do 1099-MISC or W-4G to your backers.
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#6
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Re: Staking
[ QUOTE ]
That's what I had hoped to do, but ... [/ QUOTE ] Being completely sarcastic, I hope I don't cash to not have this problem, LOL. Actually, on your year end taxes next year, you should have the opportunity to vary the amount you won, and as long as your other backers are all claiming their shares on their taxes you can attach documentaion showing the investors. I have already made all of mine aware that this is how I will be handling it, and if they decide not to report it is on them, but I WILL be documenting ALL investors and winnings that are to be divied. (If they don't like the idea of the IRS knowing they had a piece of my action, then they do not need to take a peice of my action and it is on them to make that decision. I am great friends of all my investors, and while I will do alot for them, donning the county oranges is not one of them. |
#7
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Re: Staking
[ QUOTE ]
According to Russ Fox, the Rio will no longer accept 5754 forms and you'll have to do 1099-MISC or W-4G to your backers. [/ QUOTE ] Thanks soup. Now, I'll fill out the 1099 to report income that I send to my friend (which is essentially a loss), which means that I'm not taxed on it, correct? Also, which form does he prepare to report this income? I searched www.irs.gov, and there was no W-4G form found; did you mean W-2G? |
#8
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Re: Staking
[ QUOTE ]
Actually, on your year end taxes next year, you should have the opportunity to vary the amount you won, and as long as your other backers are all claiming their shares ... [/ QUOTE ] I agree with you here that you'd essentially be reporting your net gain, and the staking cut would not be taxed twice- but the problem is that the IRS requires forms for this type of transaction. You'd probably be fined in some sort of way if audited... |
#9
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Re: Staking
You have a problem if you report the amount you give your back as a loss. Lossess are claimed as miscellanous deductions and are subject to the dreaded alternative tax.
So losses are not deducted dollar for dollar. |
#10
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Re: Staking
Gambling losses are allowed under the AMT. It's one of the few deductions available for the AMT.
For the o.p., I wrote about the staking situation on my tax blog. -- Russ Fox |
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