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#21
02-20-2007, 04:26 PM
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Re: Frozen Neteller funds *ARE* taxable
[ QUOTE ]
But in the Neteller case, it is close to black and white. [/ QUOTE ] It is not 
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#22
02-20-2007, 04:28 PM
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Re: Frozen Neteller funds *ARE* taxable
[ QUOTE ]
[ QUOTE ] “Income although not actually reduced to a taxpayer's possession is constructively received by him in the taxable year during which it is credited to his account, set apart for him, or otherwise made available so that he may draw upon it at any time, or so that he could have drawn upon it during the taxable year if notice of intention to withdraw had been given. However, income 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) [/ QUOTE ] Could the IRS take this stance and say you need to pay taxes on what is held up in neteller, sure they could. Could you take them to court and argue that "substantial restrictions and limitations" have been placed on those funds and beat them? Probably. I see your point, but this isn't a cut and dry "funds held in NT ARE taxable" issue. It's a "funds held in NT may be, but probably aren't, taxable" [/ QUOTE ] But income ***WASNT*** "subject to substantial limitations or restrictions" at the time the session ended. Therefore, constructive receipt occurred. To further quote your 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). It is cut and dry.
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#23
02-20-2007, 04:29 PM
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Re: Frozen Neteller funds *ARE* taxable
[ QUOTE ]
So if I won money in 2005, but it was in Neteller until 2006, at which point I withdrew it to my bank...can I pay taxes on it for 06 or do I need to do an ammended return and count it as '05. (it's only about 1,500.) I was going to do an ammended return, but if what you're saying is true, it would actually count as 06 income. [/ QUOTE ] I think you're misreading what he is saying. If you made it in 05, it's 05. And as long as you claimed it in 05 or 06, I wouldn't sweat filing an amended return over 1.5K.
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#24
02-20-2007, 04:30 PM
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Re: Frozen Neteller funds *ARE* taxable
[ QUOTE ]
So if I won money in 2005, but it was in Neteller until 2006, at which point I withdrew it to my bank...can I pay taxes on it for 06 or do I need to do an ammended return and count it as '05. (it's only about 1,500.) I was going to do an ammended return, but if what you're saying is true, it would actually count as 06 income. [/ QUOTE ] It's taxable in 2005, not 2006.
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#25
02-20-2007, 04:31 PM
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Re: Frozen Neteller funds *ARE* taxable
[ QUOTE ]
[ QUOTE ] So if I won money in 2005, but it was in Neteller until 2006, at which point I withdrew it to my bank...can I pay taxes on it for 06 or do I need to do an ammended return and count it as '05. (it's only about 1,500.) I was going to do an ammended return, but if what you're saying is true, it would actually count as 06 income. [/ QUOTE ] I think you're misreading what he is saying. If you made it in 05, it's 05. And as long as you claimed it in 05 or 06, I wouldn't sweat filing an amended return over 1.5K. [/ QUOTE ] Okay cool. Thanks.
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#26
02-20-2007, 04:31 PM
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Re: Frozen Neteller funds *ARE* taxable
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OP, you are not forced to pay income that you never realize. If you cannot access the funds, then you never realized the income. I'm too busy to look up the exact guidance on this right now, but you're not correct. I've been doing this for 10 years, trust me. [/ QUOTE ] How is this different than winning in a casino, getting robbed, and having to pay tax on the income? Is it because you actually held the money briefly?
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#27
02-20-2007, 04:36 PM
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Re: Frozen Neteller funds *ARE* taxable
[ QUOTE ]
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) [/ QUOTE ] [ QUOTE ] 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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#28
02-20-2007, 04:38 PM
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Re: Frozen Neteller funds *ARE* taxable
[ QUOTE ]
[ QUOTE ] OP, you are not forced to pay income that you never realize. If you cannot access the funds, then you never realized the income. I'm too busy to look up the exact guidance on this right now, but you're not correct. I've been doing this for 10 years, trust me. [/ QUOTE ] How is this different than winning in a casino, getting robbed, and having to pay tax on the income? Is it because you actually held the money briefly? [/ QUOTE ] 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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#29
02-20-2007, 04:38 PM
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Re: Frozen Neteller funds *ARE* taxable
[ QUOTE ]
[ QUOTE ] OP, you are not forced to pay income that you never realize. If you cannot access the funds, then you never realized the income. I'm too busy to look up the exact guidance on this right now, but you're not correct. I've been doing this for 10 years, trust me. [/ QUOTE ] How is this different than winning in a casino, getting robbed, and having to pay tax on the income? Is it because you actually held the money briefly? [/ QUOTE ] winning in a casino and then getting robbed is different from the OP. In that instance, you would claim the income then write off a loss due to theft. In the neteller example, the money has not been stolen from you (yet), it is simply inaccessable.
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#30
02-20-2007, 04:42 PM
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Re: Frozen Neteller funds *ARE* taxable
[ QUOTE ]
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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