Taxes question - what is the definition of a session?

[MicroBob]

terrific post.

[Jimbo]

[ QUOTE ]
check with representative Jim Kasper from North Dakota about the definition of a poker session.

If he can get a referendum on the ballot next year to allow the state of North Dakota to run legal online poker from there, he has indicated that he will ask his revenue department to stipulate to IRS that a session of poker in North Dakota is one year in duration. He understood when I pointed out how unfair the existing rulings are for recreational gamblers.

That is the good news. Imagine how many new poker players would feel better about money in a US poker room? Also, there is reason to believe that the state of North Dakota would act as the banker for players' bankrolls and just send the losses and the rake to the poker sites. In other words your bankroll is safely in the hands of a US bank, instead of an offshore poker room.

The bad news is that the existing poker sites are not supporting the measure, but rather are taking a wait and see attitude. This means that they aren't getting the money needed to even get the issue on the ballot in November.

So all of you who moan about taxes, and offshore poker sites being petty dictators, think about what you can do to spread the word.

[/ QUOTE ]

Interesting idea but it has no chance of passing constitutional muster. See the interstate commerce clause. It might stand a chance beiong successful for gambling originating within the State of North Dakota but then you wil have not only international trade considerations but issues with the Wire Act of 1974. In short no State is going to be able to change US gambling laws as they pertain to interstate or International commerce.

Jimbo

[Scuba Chuck]

It would seem to me, that there are only two significant issues that anyone who wants to follow the tax code.

1. Keeping proper records
2. Alternative Minimum Tax (AMT)

Number 2 on this list is of far more importance to me. I play SNGs, and this year I'm likely to be spending ~ $80,000+ a month in buyins. Even if I assume a moderate return on investment (say 10%), we're talking about ~ $88,000 in winnings (and subsequently, $80,000 in losses). If we average out that amount annually, that's a sub $100k poker income. But, I will have to report over $1,000,000 in winnings. I feel that this is going to have a significant impact on my permissible deductions (due to AMT regs). Essentially paying taxes is a rake I can't overcome. Thus, I am forced to define a session as, one month.

[bigballz]

[ QUOTE ]
It would seem to me, that there are only two significant issues that anyone who wants to follow the tax code.

1. Keeping proper records
2. Alternative Minimum Tax (AMT)

Number 2 on this list is of far more importance to me. I play SNGs, and this year I'm likely to be spending ~ $80,000+ a month in buyins. Even if I assume a moderate return on investment (say 10%), we're talking about ~ $88,000 in winnings (and subsequently, $80,000 in losses). If we average out that amount annually, that's a sub $100k poker income. But, I will have to report over $1,000,000 in winnings. I feel that this is going to have a significant impact on my permissible deductions (due to AMT regs). Essentially paying taxes is a rake I can't overcome. Thus, I am forced to define a session as, one month.

[/ QUOTE ]
Why the hell would you count each sng cash as winnings? Wait until the day is over, and THEN count your win/loss for the day. I doubt anyone on here is counting their buy ins back as winnings.

[SwordFish]

[ QUOTE ]
I play SNGs, and this year I'm likely to be spending ~ $80,000+ a month in buyins. Even if I assume a moderate return on investment (say 10%), we're talking about ~ $88,000 in winnings (and subsequently, $80,000 in losses). If we average out that amount annually, that's a sub $100k poker income. But, I will have to report over $1,000,000 in winnings.

[/ QUOTE ]


Chuck -

You are going about this the wrong way. Consider each day as one session and as bigballz said, net each day.

Say you spend $4000 per day on buy-ins and win back $4500. At the end of the day you log $500 in winnings.

Assume you play 25 days a month, win 20 days($500 each), lose 4 days ($500 each) and break even 1 day.

At the end of the month your log shows:

$10,000 winnings

$2,000 losses

At the end of the year your log shows:

$120,000 winnings

$24,000 losses


This is a completely reasonable way of reporting and will not raise any red flags. Attempting to claim that you played a month long session will.


SF

[theRabbit]

I think SwordFish's advice on day by day reporting is good in light of the fact that there is not yet a clear legal definition of session in regards to online play. I am not an accountant or lawyer so this is just my opinion. It seems reasonable and allows you to record winnings/losses contemporaneously, which is an important element of the recording requirement.

I have a few related questions mostly in regards to satellite, step, and multi session tournaments which do not easily ft into day by day reporting. Mayve I should start another thread for these (so this one doesn't jump in too many directions.).

But one big Q (question) I have is:

Why don't you make yourself into a business?

You can then aggregate all wins and losses over a year (like stocks) plus there are lot of other advantages (write offs) related to having a business.

It seems based on the volume, consistency of play, and objectives (to make money as opposed to socializing or just having fun) and, importantly, that you are making a profit, you should qualify.

[Fryguy]

[ QUOTE ]
i consider a full day regardless of breaks, time whatever.

maybe not right, but it's what i'm going to do regardless

[/ QUOTE ]

A session for me is 1 day 1 limit. If I play for 5 hours in the morning, and go out for the day, then come back and play 2 hours after dinner, that's 1 session.

Sessions that wrap around past midnight are for the previous day for me.

Different limit = different session.

[ottsville]

[ QUOTE ]
It's not worth the man hours spent to collect the money

[/ QUOTE ]

The IRS does not have to show a profit - they can "Waste" man hours. This is government were talking about. They'll spend 20 man hours to collect $10 bucks from you then raise everyone's taxes to pay for it.

Along the same lines...the Poker Players Aliiance ma ybe something to consider joining. They are a lobby group intended to keep online poker legal, but hopefully they would be willing to address these issues in DC if they arise.

[*TT*]

Lots of bad advice in this thread. Anyone who counts a session as a 24 hour period is in for a rude awakening... according to the IRS they expect the player to track a session as the time you sit at a single table in a B&M room. You must also track the table number (I think I learned this from Russel Fox). The online equivalent would be to track each and every table you sit down at, which is easily done for you in Poker Tracker.

TT [img]/images/graemlins/club.gif[/img]

[Dennisa]

I believe steps and satilites would go under the parlay rule. If you win a 10K seat to the wsop, there is no tax until the the seat is played and only if you cash in the event. If you do not cash it is considered a wash transaction. If you do cash you can only deduct the price of the satilite seat, not the 10K against your winnings.