So I called a CPA..

[DING-DONG YO]

[ QUOTE ]
Also I believe somewhere in IRS publications on record keeping they suggest you record such things as the table number, who the other players were, etc.

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I'm about 100% sure this was never in an IRS publication. The definition of a session has never been clarified by the IRS. Most take it to mean a day's activity.

[mrconga]

Why do you have to track every session? Isn't it easier to state a starting balance at the beginning of the year and an ending balance at the end of the year? If I start with 10k on Jan 1 and end up with 50k at the end of the year, don't I just pay taxes on the 40k ?

[Link774]

You have to report it by session because the IRS says so. It is easier to use the total balance, but they're not looking to make things easy. In your example, no, you will probably end up paying taxes on something like 80K of wins and deduct 40K of losses which is the same net result but by session.

[MadTiger]

[ QUOTE ]
[ QUOTE ]
Also I believe somewhere in IRS publications on record keeping they suggest you record such things as the table number, who the other players were, etc.

[/ QUOTE ]

I'm about 100% sure this was never in an IRS publication. The definition of a session has never been clarified by the IRS. Most take it to mean a day's activity.

[/ QUOTE ]
This guy posts on PocketFives.com

http://www.gambling-law-us.com/Artic...ng-Session.htm

[driller]

See publication 529. Although the reference I found did not mention table number, I have seen that somewhere. The other elements are there, but I admit that you could argue that a day equals a session.

[DING-DONG YO]

Thanks, driller, I'll take a look.

[AAAA]

I spoke with representative Kasper from North Dakota a while ago. I mentioned the problem with the "netting" income and he was quite sure that if the state of North Dakota considered a year to be a poker session for purposes of their reporting taxes, that the IRS would probably actually be happy to go along with it.

We really missed a chance to get behind that legislation. Just think of the number of people who would have played online poker if they were assured of a US bank holding their money and were feeling more confident on the status of their bankroll.

[Copernicus]

[ QUOTE ]
You have to report it by session because the IRS says so. It is easier to use the total balance, but they're not looking to make things easy. In your example, no, you will probably end up paying taxes on something like 80K of wins and deduct 40K of losses which is the same net result but by session.

[/ QUOTE ]

The tax result of "session by session" tracking and "net tracking" is not the same for many, which is the reason you cant just net wins and losses for the year. (This is aside from the question of what a session is, but since they are asking for "table numbers" it would seem like a session means just that...your play at a given table.)

The big gotcha is the alternative minimum tax. If you decided that a week was a session for your recordkeeping purposes, you played three days that week and won 10,000 twice and lost 20,000 once, you would net your session out to 0. If the IRS can justify that a session is a day, you would be reporting 20,000 winnings and deducting 20,000 losses, which will wind up in increased taxes.

[AAAA]

another reasonable and beneficial way to look at it is a session is what you played at one site, put all your net wins from each site on the line 23 or whatever, and all the net losses from each site on schedule A. This will be much lower than the daily, or table sessions, and might not trigger any questions at all; especially since doing it that way will probably be about the same as a B&M player who is only at one table at a time ever! That is the ridiculous part...the "session" for a B&M player is a not unreasonable way to do it, but for an online player it is not reasonable! It is not a true indication of your "win"

perhaps IRS won't like it, but it is "reasonable" and they will be unlikely to do more than slap you on the wrist and suggest you do it differently.

[soapbox rant]remember to be aggressive but not ridiculous, because if one time in 100 you are audited, you will need to have something to overcome the way they will tell you you have to do it! Guaranteed, they will want you to pay about 3 times what you really owe! Just try to prepare for the worst and be happy if it doesn't happen![/soapbox rant]

[Wake up CALL]

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perhaps IRS won't like it, but it is "reasonable" and they will be unlikely to do more than slap you on the wrist and suggest you do it differently.

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Yes, if you consider interest, penalities and the possibilty of being charged with fraud as a "slap on the wrist". Why do people offer such poor advice when they have zero experience in the subject?