Is rakeback income?

The Worm · #1 02-24-2007, 11:27 PM

Cant find any answers for this, and I dont know where else to post it. I am almost done filing my taxes except I cant finish my poker earnings part. Some say yes, others say no.

My take is no, it is money that was paid that you receive back as a rebate.

But to be honest, I have no idea. Thanks for any and all help.

Sniper · #2 02-24-2007, 11:39 PM

Rakeback is Income!

You have already reduced your Income by the amount of the Rake, thus any Rakeback has to be added back into Income.

The Worm · #3 02-24-2007, 11:44 PM

Can you back this up with anything, or is this from personal knowledge of filing in the past?

goodgrief · #4 02-24-2007, 11:44 PM

A rebate or discounted price is not income. When you buy something on sale, you don't pay tax. When you get a rebate from the auto dealership, you don't pay tax. Seems pretty straight forward to me.

Sniper · #5 02-24-2007, 11:46 PM

You should check with a tax professional, but I do not believe there are any competent CPAs knowledgable in this area that would tell you otherwise...

Sniper · #6 02-24-2007, 11:51 PM

[ QUOTE ]
A rebate or discounted price is not income. When you buy something on sale, you don't pay tax. When you get a rebate from the auto dealership, you don't pay tax. Seems pretty straight forward to me.

[/ QUOTE ]

Gambling is not a purchase, and Sales Tax is not Income Tax...

You do not account for Rake as an expense.

A rebate on purchase is not income because it is an expense reduction, so your reasoning does not apply.

Uglyowl · #7 02-24-2007, 11:55 PM

Rakeback definately = income. I'd be curious how it is tied to sessions though for tax purposes.

Is a $15 loss (paying $100 rake) really a small gain due to RB?

MoolahMuerte · #8 02-25-2007, 12:02 AM

Sniper - isnt there a thread for this from some guy "ads" or something? Rake isn't a "fee" in the traditional sense - its usually a percentage of the pot - you either have gambling winnings/losses - the rake is absorbed in this. Your "winnings" show up AFTER rake - so if you add back its income - right?

TheOpus · #9 02-25-2007, 12:11 AM

When you receive a rebate on a purchase like a vehicle, you reduce your basis by the amount of the rebate. If you buy a new car for $10,000 and receive a rebate of $500, your basis is $9,500. It is the basis from which you calculate gain/loss should you sell the car or need to figure depreciation if you use it for your business. So you're not counting the rebate as income, thus you're not paying tax on it. So goodgrief is right.

IRS Publication 525 states that "if the refund or other recovery and the expense occur in the same year, the recovery reduces the deduction or credit and is not reported as income." That is similar to reducing the basis as described above.

When you file, you can deduct your gambling losses to the extent of your gambling winnings. (These are two separate numbers. This is not one net number.) So, the rake you get back reduces the basis of your winnings. Subtract the rake from your winnings and procede. (Claw eyeballs out at this step if necessary.)

Sand · #10 02-25-2007, 12:13 AM

[ QUOTE ]
Rakeback definately = income. I'd be curious how it is tied to sessions though for tax purposes.

Is a $15 loss (paying $100 rake) really a small gain due to RB?

[/ QUOTE ]

I treat it that way (and think it is the correct way to do it). I keep track daily and estimate my RB daily and add it in. It certainly helps in reducing your swings.